ETF choice driven by consumers
The decisions to use exchange traded funds (ETF) are being led by consumers and the clients of advisers who have benefited from the ongoing education campaigns around the product set.
ANZ ETFS, co-head and head of distribution, Danny Laidler said despite ETFs being in the local market for many years their slow take-off has allowed investors and regulators to examine how they have worked in other markets and how they could be used in an Australian context.
"The Australian Securities and Investments Commission (ASIC) has taken a conservative approach to their take-up and product use which has allowed the Australian market to avoid some of the problems present in faster growing markets," Laidler said.
At the same time the general industry wide education push has moved investors and financial adviser questions from ‘what are ETFs' to ‘how can we use ETFs', according to Laidler.
"The ETF investment decision is often client led with these people asking for advice, particularly those who have come to ETFs through the stock broker market," Laidler said.
Laidler said the growth of the ETF sector was also partly driving and being driven by the growth of the separately managed account sector as both vehicles shared similar characteristics of low cost and transparency.
These factors would continue to lead to more products being issued with adviser usage boosting the presence of ETFs on approved product lists which in turn would lead to greater adviser use, according to Laidler.
"Half of the retail investment market is currently held in self-managed super funds and these are a good match for ETFs with fund members who want to trade and hold stocks able to do that with an ETF," Laidler said.
"ETFs can also catch self-directed investors who are not receiving advice and redirect them as we suggest people get advice around their risk appetite and investment choices."
AUTHOR
Jason Spits
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