Will ETMFs achieve same adviser take-up as ETFs?

The increased take-up of exchange traded funds (ETFs) by advisers means more managed fund providers might need to offer their products as active ETFs or exchange traded managed funds (ETMFs) to take advantage of that growth. 

The ‘Australia’s trading transformation’ whitepaper from AUSIEX had found ETF take-up by advisers trading through platforms more than doubled during COVID-19. 

Pre-COVID, one-in-five would trade ETFs, which grew to one-in-two during the pandemic. 

Last year, Magellan had converted their Global fund  to an open class structure to list on the Australian Securities Exchange (ETF), while Hyperion also listed its Global Growth Companies fund earlier this year. 

Andrew Stewart, AUSIEX head of product and distribution, said ETF take-up had been a strong trend in the advised market, but other types of ETFs were becoming more popular. 

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“More diversification in that space is interesting; it provides more opportunities for advisers to further broaden out their diversification in their portfolios,” Stewart said. 

Advisers would likely continue to look to take advantage of cost-effective ways to build diversified portfolios. 

“As advisers move from big national dealer groups and moving into self-licenced regimes, they’re looking to review their value proposition,” Stewart said. 

“They’re very interested in cost-effective, transparency around the holdings and tax effectiveness. 

“In line with that theme, as more ETFs come available, it broadens out the opportunities that are available to them. 

“If ETF up-take has already been so strong, you’d imagine as more products come available, that will certainly be of interest to advisers who are using direct assets in their clients’ portfolios.”