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
Ten Cap has announced it will launch its first active ETF on the ASX later this month, expanding retail access to its flagship Australian equities strategy.
Flows into cash and fixed income ETFs rose by 46 per cent in October with investors particularly demonstrating a preference for Australian credit ETFs as they move away from AT1 bank hybrids.
Having identified Australia as a growth market, J.P. Morgan Asset Management has collaborated with Betashares to offer two multi-asset managed portfolios on its Direct platform, the first funds on the platform from an external manager.
First Sentier has announced it will transition the Stewart Investors investment management responsibilities to its affiliate investment team in light of three senior portfolio manager exits.
