ETF sector to continue rapid growth
The exchange traded product (ETP) sector is set to continue growing by 40 to 60 per cent in the next three years as financial planners increase their ‘light touch' use of exchange traded funds (ETF), with non-aligned planners being the front-runners in the use of the ETFs blended with other managed funds.
ETF Consulting, which has conducted a review of the ETP sector, said planners were more likely to expand their asset class exposure and usage of ETFs among clients, but stated that institutionally-aligned advice channels were only making incremental changes to product lists and providing minimal valid support to the sector.
Despite this, ETF Consulting said the sector would see growth that could be described as unsustainable, but was consistent with the transition from a relatively young market into a more mature market.
According to ETF Consulting, this was confirmed in the 50 per cent increase in the size of the sector in the past 12 months, driven primarily by the influx of new assets to the ETF sector.
Self-directed investors — typically those using self-managed superannuation funds (SMSF) — represent a further area of growth for ETPs; however these investors are disaggregated, with ETP issuers unable to identify decision makers within the sector.
ETF Consulting said that better engagement strategies and the appropriate provision of products were required to meet the needs of these investors.
Recommended for you
Research by Morningstar has found fixed income funds are bucking a general trend around managed fund fee dispersion with a smaller fee dispersion compared to equity ones.
As investors seek to diversify their portfolios, the naming of bond labels has broadened out to include green, social and impact bonds, according to the annual RIAA report.
Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million.
Metrics Credit Partners is expanding its private credit fund range with a managed fund for retail investors following investor demand.
