Advisers replace active management with smart beta ETFs

VanEck/ETF/active-funds/Smart-beta/

13 September 2021
| By Liam Cormican |
image
image
expand image

Financial professionals have boosted their use of exchange traded funds (ETFs) to replace actively managed funds with smart beta strategies and to reduce overall portfolio costs, according to Vaneck.

VanEck’s sixth smart beta survey, that gathered responses from 547 financial advisers in Australia, found respondents felt an increased use of ETFs had a positive impact on their business through greater control of portfolio outcomes, increased transparency and improved performance.

The poll revealed 91% of advisers used ETFs in client portfolios, up from 87% in 2020.

Of all respondents that used ETFs, 56% use smart beta ETFs as a substitute or replacement for active management while 55% of financial professionals plan to increase their smart beta allocation in the next 12 months.

Smart beta investment strategies track an index that differs from the traditional market capitalisation approach of selecting shares, bonds or other assets.

Arian Neiron, VanEck's chief executive and managing director, Asia Pacific, said: “Not surprisingly, strong performance is the number one motivation for advisers using smart beta strategies, with improved portfolio diversification, reduced volatility and improved risk-adjusted returns also key reasons for using smart beta ETFs.

The entrenched underperformance of actively managed funds, which typically charge much higher fees, is also facilitating the growth of the ETF market, Neiron said.

“We also found that 75% of respondents think smart beta strategies are going to become more prevalent in portfolios; the reason for that could be that advisers are happy with their performance; with 99% of smart beta users satisfied with their strategy,” said Neiron.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

1 month 3 weeks ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

1 month 4 weeks ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months ago

Entireti has unveiled the new name for the AMP financial advice businesses that it acquired last year....

3 weeks 3 days ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

2 weeks 2 days ago

The Federal Court has made interim orders to freeze the assets of a managed investment scheme, its responsible entity, and a director....

1 month ago

TOP PERFORMING FUNDS