ETMF $900m industry to double
The exchange traded managed funds' (ETMF) $900 million industry is set to double over the next 18 months, amid growing demand for active management at low costs, according to Australian fund manager, BetaShares.
BetaShares‘ managing director, Alex Vynokur, said the ETMF industry had grown to $900 million in funds under management (FUM) in just two years. That surpassed the growth of mFunds which had been in Australia for 16 years and only accounted for $200 million in FUM.
There was 160 mFunds in Australia, while there was only eight ETMFs in Australia. (mFunds were unlisted managed funds that were bought and sold via the Australian Securities Exchange.)
"We are definitely encouraging more active managers to consider making their strategies available to clients in that way [via ETMFs]," Vynokur said.
He partnered with AMP Capital to launch an ETMF to the market (the dynamic markets fund (hedge fund). But to expand Australia's range of products, he was already working with several other active fund managers to develop more ETMFs.
Post the Future of Financial Advice (FOFA) reforms advisers were voting with their feet and moving toward actively managed funds ETFs as opposed to mFunds.
ETMFs gave advisers access to active management with administrative ease, he said. Advisers could also easily review and rebalance clients' portfolios, via buying and selling on the stock exchange.
"It lowers the cost to clients, by connecting them directly and removing some of the middle men that are standing between the clients and their investment solutions. ETMFs had significant benefits. Those are significant factors that should attract more active managers towards making their strategies available in an exchange traded format," Vynokur said.
Recommended for you
Natixis Investment Managers has hired a distribution director to specifically focus on the firm’s work with research firms and consultants.
The use of total portfolio approaches by asset allocators is putting pressure on fund managers with outperformance being “no longer sufficient” when it comes to fund development.
With evergreen funds being used by financial advisers for their liquidity benefits, Harbourvest is forecasting they are set to grow by around 20 per cent a year to surpass US$1 trillion by 2029.
Total monthly ETF inflows declined by 28 per cent from highs in November with Vanguard’s $21bn Australian Shares ETF faring worst in outflows.
