The transparent and robust structure of exchanged-traded funds (ETF) has become increasingly accepted by financial advisers, according to iShares’ managing director.
“There’s increasing acceptance that the ETF structure is robust, as it’s withstood multiple highly-volatile periods and as we’ve always recognised, when volatility increases, the use of the ETF product also increases,” iShares managing director Mark Oliver told InvestorDaily.
“There’s been no shortage of volatility to test this structure and it has held up extremely well. That is giving advisers increasing confidence.”
New ETF products and issuers coming to market had given advisers comfort in Australia’s ETF market as a now well-established industry, in addition to the sector review undertaken by ASIC, Oliver said.
“Advisers are understanding that the Australian market is actually a quite simple, physically-backed ETF market and not subject to some of the nuances that have been experienced in Europe,” he said.
ETFs had experienced $300 million of new asset inflows this year, following the change of operating rules allowing fixed-income AQUA products, including ETFs, to trade on the Australian Securities Exchange from 10 January.
The industry had significantly progressed from product launch to the application of ETFs, Oliver said.
“There’s still a spectrum of understanding and we are still a new industry, but there’s been a lot achieved in the last five years particularly,” he said.
“The number of advisers who are adopting ETFs is growing and the number of platforms upon which you can access ETFs is substantially growing, and that’s all part of the increased uptake.”
This year, less than 30 per cent of inflows had been in broad Australian equity markets, which was not the case in prior years, signalling the maturity of the industry as ETF users developed methods to solve portfolio construction challenges, he said.
IShares was currently working on its ETF product pipeline to extend the choice available to Australian investors, he said.
