The level of adoption of exchange trade funds (ETFs) among financial advisers has reached all-time highs, with currently 59% of advisers already using ETFs in constructing client portfolios compared to only 27% in 2010.
According to the research by ETF manager BetaShares and Investment Trends, this number would continue to grow, with another 17% of advisers intending to adopt ETFs for the first time by the end of 2021.
Those advisers who recommended ETFs were allocating on average 20% of net inflows to ETFs, which represented 17% and 7% growth compared to 2019 and 2013, respectively.
The research also found that next to costs and diversification, the most important driver for ETF adoption was the ability to access specific markets or asset classes, as according to 69% of surveyed planners.
“Cost-effective diversification is still the number one reason advisers use ETFs. However, the findings support our observation that investors and advisers are becoming increasingly sophisticated in their use of ETFs to achieve more targeted portfolio construction goals,” Alex Vynokur, BetaShares chief executive, said.
“With the wide selection of ETFs now available on the ASX, it’s easier than ever for ETFs to access a range of asset classes, sectors, regions and themes in a convenient, cost-effective way.”
The report also stressed that the proportion of financial advisers who provided advice on responsible investing more than doubled in the last five years, from 19% in 2015 to 40% in 2020.
“We have seen tremendous take-up in our ethical ETFs since we launched our first ethical ETF in 2017, with more than $2 billion now invested across our ethical range,” Vynukur said.
“There has been strong demand for this kind of solution from self-directed and advised investors alike. Advisers are responding to this demand. We expect the trend of increasing adoption of responsible investing to continue for some time.”