Speaking at a briefing in Sydney yesterday, BetaShares managing director Alex Vynokur said ETFs are viewed as strong competitors to actively managed funds by the investment community.
“There is a bit of a perception that ETFs may cannibalise the actively managed funds that the banks have an affiliation with,” he said.
“If you look at CBA, which owns Colonial First State, NAB with MLC, and Westpac with BT Financial, there is a bit of a perception that ETFs compete with actively managed funds.”
When it comes to investor behaviour on the subject of ETFs and active funds, there is little difference between the two, said Mr Vynokur.
"It really comes down to the motivation of financial advisers that are bank owned to recommend ETFs," he said.
But for Mr Vynokur it isn't an 'either/or' proposition when it comes to active funds or ETFs.
He argues that investors can reduce the cost of their portfolio through a combination of ETFs and actively managed funds, rather than an allocation to one or the other.
“Our experience is that ETFs tend to attract new incremental flows into markets, so to us it appears very clear that ETFs actually capture a significant amount of new money that goes into the market,” he said.
“ETFs have a place in lowering the overall cost of portfolios because if you blend, for example, a portion of your allocation to active managers and a portion to ETFs, the cost of your portfolio will come down.”
Mr Vynokur’s comments come after yesterday’s release of the BetaShares/Investment Trends November 2013 ETF report, which showed the number of ETF investors grew by nearly 50 per cent in the 12 months to November 2013.
And the strength of the sector shows no signs of waning.
Among those that currently hold ETFs, 70 per cent plan to make an additional ETF investment in the next 12 months, Investment Trends senior analyst Recep Peker said.
“There is a lot of demand from current users and those planning to in the next 12 months,” Mr Peker said.
“We expect at least 25,000 new ETF investors in the next 12 months.”
