ETF sector to continue rapid growth
The exchange traded product (ETP) sector is set to continue growing by 40 to 60 per cent in the next three years as financial planners increase their ‘light touch' use of exchange traded funds (ETF), with non-aligned planners being the front-runners in the use of the ETFs blended with other managed funds.
ETF Consulting, which has conducted a review of the ETP sector, said planners were more likely to expand their asset class exposure and usage of ETFs among clients, but stated that institutionally-aligned advice channels were only making incremental changes to product lists and providing minimal valid support to the sector.
Despite this, ETF Consulting said the sector would see growth that could be described as unsustainable, but was consistent with the transition from a relatively young market into a more mature market.
According to ETF Consulting, this was confirmed in the 50 per cent increase in the size of the sector in the past 12 months, driven primarily by the influx of new assets to the ETF sector.
Self-directed investors — typically those using self-managed superannuation funds (SMSF) — represent a further area of growth for ETPs; however these investors are disaggregated, with ETP issuers unable to identify decision makers within the sector.
ETF Consulting said that better engagement strategies and the appropriate provision of products were required to meet the needs of these investors.
Recommended for you
With active ETFs becoming the latest choice as fund managers target the retail audience, their high fees may be a detractor as research finds investors are shunning those priced any higher than 50 bps.
The possibility of a dissenting vote from shareholder L1 Capital has led Platinum Asset Management to scrap its conversion plan for the $450 million Platinum Capital LIC into an ETF.
Family office Lederer Group has made an off-market takeover bid for ASX-listed Elanor Commercial Property Fund, with chair Paul Lederer taking exception at the firm’s lack of accountability, oversight and transparency.
Janus Henderson is actively seeking to partner with private wealth firms in Australia as it looks to expand its number of strategic partnerships, as well as focus on retirement income product development.
