‘Overwhelming’ demand for ETFs among financial advisers
Almost all financial advisers are using ETFs in their client portfolios, up from 87 per cent in 2020, according to VanEck.
According to findings released by VanEck, financial professionals have expressed a growing preference for ETFs.
The asset manager’s research indicates that this investment product is becoming the preferred choice for advisers, driven by evolving portfolio strategies and the superior performance of ETFs compared to active funds.
The annual survey of Australian financial professionals revealed that 70 per cent of respondents had allocated to ETFs more frequently over the last 12 to 18 months (up from 62 per cent last year), with almost all financial advisers (95 per cent) indicating they use ETFs (up from 91 per cent in 2021 and 87 per cent in 2020).
“The findings from our latest survey demonstrate an overwhelming preference for ETFs by financial professionals,” said Arian Neiron, CEO and managing director at VanEck Asia-Pacific.
Changes in economic outlooks have led to increased usage of ETFs, according to the research, with 42 per cent of financial professionals citing shifts in portfolio strategy as a primary reason for their heightened adoption. Additionally, reduced portfolio costs (49 per cent) and greater internal knowledge and awareness of ETFs (36 per cent) ranked among the top three drivers for 2024.
“Advisers want more control, better relative performance, and greater cost efficiency, and ETFs are uniquely placed to offer all three,” said Neiron.
He shared that the survey found that of the 47 per cent of respondents who had an existing smart beta allocation, most (59 per cent) used at least two of these strategies across their client portfolios, 64 per cent found they outperformed active strategies, and 99 per cent were satisfied with their smart beta investments.
Smart beta, as Neiron explained, represents an evolution of first-generation ETFs. Unlike traditional ETFs that simply track market capitalisation indices, smart beta strategies employ more sophisticated investment approaches aimed at achieving targeted outcomes, often at a fraction of the cost of active management.
“Smart beta strategies have transitioned from market disruptor to the mainstream. A significant proportion of practitioners are incorporating smart beta ETFs into portfolios, with one in two respondents saying they had an existing allocation and a further 21 per cent currently evaluating them,” said Neiron.
“We anticipate a greater adoption rate as more financial professionals become acquainted with the benefits and portfolio construction opportunities of smart beta ETFs.”
Recommended for you
Financial advisers nervous about the liquidity of private markets funds for their retail clients are the target of fund managers launching semi-liquid products which offer greater flexibility and redemptions.
Former Pendal head of multi-asset Michael Blayney has been appointed as a member of the investment committee at specialist managed accounts provider Evidentia Group.
Australian Ethical has seen its funds under management surpass $13 billion in the latest quarter, thanks to retail and wholesale net flows of $173 million but a transition project by Mercer affected superannuation flows.
A salary guide has unpacked the salaries earned in various asset classes, with managing directors in one space earning north of $500,000.
