Advisers move towards ETFs
Exchange-traded funds (ETFs) have increased in popularity over the past 12 months following a dramatic shift in the investment landscape, according to Australian Index Investments (AII) managing director Jim Socratous.
AII has announced a series of sector-based ETFs for the Australian financial advisor market, while ETF information seminars hosted by the Australian Securities Exchange in Sydney and Melbourne where AII is to be launched have drawn more than 150 registrations, according to AII.
“The move to fee-for-service models has facilitated the rise in popularity of these investments. As advisers are no longer dependent on trailing commissions for their income, they are much more open to investing in listed products,” Socratous said.
With many funds failing to match the benchmark index during the financial crisis, advisers were moving towards investments with lower management fees, with ETFs also having the advantage of matching the index, Socratous said.
The wide-scale freezing of funds was also a factor, with investors wanting to know their funds were liquid at all times, he added.
Every ETFs is different, because investors could choose sectors rather than simply investing in an overall market index, allowing them to apply an active rather than passive investment strategy, Socratous said.
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