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Advisers promoting ETFs

The number of financial advisers promoting New Zealand exchange-traded funds to their clients is growing, Smartshares spokesman Sam Stanley says.

Thursday, June 5th 2014, 6:00AM 1 Comment

by Susan Edmunds

NZX recently ran an investor education day in conjunction with the Commission for Financial Literacy and Retirement Income to raise retail interest in ETFs.

The global market is growing at an annual rate of 20% and is worth US$2.4 trillion.

But the NZX’s five Smartshares funds, which are the only ETFs for NZ stocks, are only worth a combined $380 million.

Stanley said while the funds’ FUM was small at the moment, it was growing.  That value was up from $280 million a year or so ago.

He said Smartshares had about 30 “very loyal” adviser groups who supported the product.

Interest in Smartshares was particularly driven by independent advisers, he said. “Those who are not beholden to large banks or any affiliation. They’re the ones that are the main supporters.”

The number of advisers dealing with ETFs was increasing, he said, as was their funds under management.  “We’re continuing to grow the number of advisers and getting other market participants involved.”

It was brokers who tended not to support ETFs as heartily, he said, and whom NZX was targeting.   “That is changing, we’ve had some really good dialogue… they’re more open to promoting New Zealand ETFs than they were a few years back.”

That was possibly because of increasing levels of client inquiry driven by international interest in ETFs, he said, and a global move to passive investment rather than active.

He said active managers should not feel threatened by ETFs, though, as portfolios should have a mix of passive and active strategies.

NZX is planning an ETF masterclass towards the end of this year for advisers, brokers and institutional clients.

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Comments from our readers

On 9 June 2014 at 7:52 am Colson said:
New Zealand has not really participated in the international ETF revolution and Smartshares has not really made an impact in KiwiSaver with their ETF-based scheme.

The last time I checked out a Smartshares ETF investment statement the only creativity on display was in the various fees they may charge - jokes aside there must have been 5 or 6 different fees.
Plus has anyone managed to get an email response from the Smartkiwi email? I've given up emailing them for scheme info. Their service seems well below par.

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