Aussie instos follow the increase in ETF use
Australian super funds, asset managers and insurance companies are keeping up with trends set up by their Asia and northern hemisphere colleagues, increasing their use in exchange-traded funds (ETFs) for tactical and strategic purposes, according to head of iShares Australia, Mark Oliver.
Research firm Greenwich Associates had documented the trends in institutional investors’ use of ETFs in the United States, showcasing year-on-year changes in behaviours of pension funds, foundations and endowments towards using ETFs.
Among investors participating in the study, 63 per cent said they used ETFs for transition management purposes this year compared to 38 per cent in 2010. At the same time the usage of ETFs for cash equitisation rose to 51 per cent from 31 per cent last year.
Managing director and head of iShares Asia Pacific, Nick Good, said the Asian institutions had also increased their use of ETFs, for tactical asset allocation adjustments and managing portfolio overlay strategies.
Oliver said he saw the same trend emerge in Australia, where institutions were using these products for essential fund management practices such as portfolio completion and cash equitisation.
“Much of the work here in Australia is education institutions about the uses of ETFs and helping them identify and evaluate all their investment options in order to achieve their specific objectives,” Oliver said.
Recommended for you
Sydney-based alternative fund manager East Coast Capital Management has formed its first advisory council as it enters its next phase of growth.
With 40 per cent of advice practices looking to increase their ETF usage, the next frontier being embraced is smart beta ETFs with flows doubling in July, providers have said.
Australian ETFs saw flows of $5.8 billion in July, more than double the previous month, and adviser adoption is tipped to help total flows reach $50 billion by the end of the year.
Pinnacle’s London affiliate, Life Cycle Investment Partners, has secured over $15 billion in FUM in its first year and achieved profitability, the firm’s fastest affiliate to do so.
