Advisers choosing investments must do more than ‘read the packet’
Just because exchange-traded funds (ETFs) share the same income objectives, doesn’t mean they’ll produce the same results, and Lonsec research has warned investors to look under the hood to see how individual funds construct their index.
Lonsec said smart beta ETFs are becoming increasingly popular for their relatively cheap fees, but investors should be mindful that not all income is created equal, and ETFs with similar income objectives can exhibit markedly difference performance,
Lonsec advised things like quality, liquidity and weights of certain stocks can result in funds with different allocations, so financial advisers “need to do more than simply read the packet” when selecting investment products.
“Financial advisers should have a thorough understanding of how individual smart beta products operate to ensure they deliver outcomes in line with their clients’ investment objectives,” said Lonsec.
AUTHOR
Anastasia Santoreneos
Recommended for you
Schroders has appointed a new chief executive as Simon Doyle steps down from the asset manager after 22 years.
Distribution of private credit funds through advised channels to retail investors will be an ASIC priority for 2026 as it releases the results of its thematic fund surveillance and guidance for research houses.
State Street Investment Management has taken a minority stake in private market secondaries manager Coller Capital with the pair set to collaborate on broaden each firm’s reach and drive innovation.
BlackRock Australia plans to launch a Bitcoin ETF later this month, wrapping the firm’s US-listed version which is US$85 billion in size.
