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
BlackRock has announced its plan to acquire real estate investment firm ElmTree Funds which will be integrated into its new private financing solutions business.
With share price growth of 45 per cent for FY25, Australian Ethical has shared why it believes the firm has done so well compared to its active peers.
ETF investors would be wise to consider global or European exposure for their equity ETF allocations, according to AXA IM, with US government action expected to hit both its equity and bond performance.
A specialist ETF provider is seeking to become “the new Betashares” with its active ETFs, thanks to its use of algorithms to achieve outperformance.
