Slow burn for advisers on ETFs
The take up of exchange traded funds (ETFs) is still low among the adviser community, despite their increasing use by direct and self-managed super fund (SMSF) investors.
Russell Investments’ director of product development for ETFs, Amanda Skelley, said the majority of inflows into Russell’s new high dividend ETF came from non-advised SMSF investors. The product took around $25 million in inflows in its first six weeks on the market.
Skelley said ETF providers have “still got an education piece to do” in order to dispel some of the myths around ETFs and convince dealer groups and advisers of the merits of the product.
Skelley said there had been strong interest from advisers at recent ETF briefings run by Russell, though the majority of dealer groups were yet to add these products to their approved product lists (APLs).
AFS and Genesys were two groups to have added ETFs to their APLs in recent months.
Australian research houses were also playing catch up in the ETF space. Skelley said Lonsec was currently the biggest rater of ETF products, while other mainstream research houses were working to expand their offering to include ETFs. Skelley said Standard & Poor's was among those considering rating ETFs, while US firm Alta Vista was a recent entrant to the Australian market.
Morningstar does not currently publish ETF research but is working towards that goal and appears relatively close to a roll-out. Van Eyk Research chief Mark Thomas said his company was not currently rating ETFs, and while it might do in the future, van Eyk was still waiting to see how the market evolved.
Lonsec’s strength in the ETF space is borne of its stockbroking background. Lonsec general manager Grant Kennway said while there was demand from advisers for ETFs, “the talk or the rhetoric is stronger than the evidence of implementation”.
He did say, however, that the tide appeared to be moving in that direction. Kennaway said for those currently using the products, the missing piece in the puzzle was fixed income ETFs.
Skelley said the “race was on” for Australian providers to launch the first fixed income ETF.
AUTHOR
Recommended for you
There is one specific risk that is a significantly higher concern for financial services directors compared to companies overall and is impacting their risk appetite, according to the AICD.
Global fund managers are shunning bonds, with the asset class seeing the largest drop in allocations in more than 20 years.
Australian Ethical has seen its funds under management reach $10 billion, driven by organic customer growth and superannuation contributions.
Financial advisers will have access to private equity investments run by WTW for the first time as it launches a pooled fund to provide savers with access to traditionally institutional assets.
