Smartshares says low-cost offer makes sense for 'client first' advisers
More advisers are turning to Smartshares’ exchange-traded funds to create a low-cost core for their clients portfolios, its product manager says.
Friday, April 21st 2017, 6:00AM
by Susan Edmunds
Dean Anderson said Smartshares had experienced a 70% increase in on-market trading last year, and a 177% increase in direct investments.
The on-market trading reflected wholesale growth from a growing number of independent financial advisers and advice groups using ETFs in portfolios, he said.
Investment is up 300% so far this year compared to the same time last year.
Anderson said advisers considering their clients’ best interests were looking for products that would deliver over many decades.
“Particularly when there are low interest rates, minimising cost is a critical factor.
“ETFs have an important role minimising client costs and delivering a market return.”
He said more financial advisers were using ETFs as the core of a portfolio and then constructing active solutions around the margin to achieve some outperformance.
There have been claims that the next few years may be a good market for active managers as the interest rate environment changes and more international volatility rolls through.
Anderson said that was not a concern for passive managers because they were fixed on a longer time horizon.
“Who knows what the market is going to do? The key is the long-term. The typical adviser considers a 10- or 20-year period."
He said unless an active manager could promise to outperform over many decades, it would not be a better solution for investors.
In Australia, investment in ETFs is set to exceed A$30 billion this year. More than 40% of Australian advisers place their clients in ETFs.
The most popular Smartshares ETFs in NZ in 2016:
NZ Top 50
US 500
NZ Dividend
NZ Mid Cap
NZ Top 10
READ MORE: ETFs phone home: a stellar year for Smartshares
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