ETPs good but could improve, says ASIC
The Australian Securities and Investments Commission (ASIC) has determined that while the exchange-traded products (ETP) market, which included exchange-traded funds (ETFs), is performing well, there’s still room to improve.
A review by ASIC found ETPs were meeting the relatively low cost and liquidity expectations of investors but there were a range of risks that required monitoring by issuers and oversight by market operators.
The review, which followed the growing investment in ETPs in Australia by retail and self-managed superannuation fund (SMSF) investors, identified the potential for the bid/offer spread to temporarily widen, leading to investors paying a spread that would be considered too high.
ASIC considered this a concern given the nature of ETPs, and recommended market operators and issuers play a more proactive role in monitoring the performance of ETPs and publish the indicative net asset value more frequently to enable advisers to make better informed decisions.
The corporate regulator identified market maker concentration as another area of risk and expects issuers and market operators to be aware of the risk and incorporate a means of managing it into their risk management framework.
AUTHOR
Anastasia Santoreneos
Recommended for you
Lonsec and SQM Research have highlighted manager selection as a crucial risk for financial advisers when it comes to private market investments, particularly due to the clear performance dispersion.
Macquarie Asset Management has indicated its desire to commit the fast-growing wealth business in Australia by divesting part of its public investment business to Japanese investment bank Nomura.
Australia’s “sophisticated” financial services industry is a magnet for offshore fund managers, according to a global firm.
The latest Morningstar asset manager survey believes ETF providers are likely to retain the market share they have gained from active managers.
