Russell Investments is preparing to bring three fixed-income exchange-traded funds (ETF) to the Australian market in the coming weeks, but has said education on the new products is critical to their success.
"Dates aren't certain as it's still going through the approval process, but we're hoping to get three ETFs out by the end of March," Russell Investments director of Australasian ETF product development Amanda Skelly told InvestorDaily.
"We'll have a corporate bond ETF, a semi-government bond ETF and a government bond ETF."
A recent Russell adviser roadshow helped test ETF concepts and found a lack of understanding of fixed-income ETFs, therefore education would play a critical role in their success, Skelly said.
"Just talking about basic characteristics of a bond is still something we need to educate certain advisers on.
"Add on the ETF complexity, I think it does get that much harder for certain advisers."
She said a fixed-income ETF was different to products advisers might be used to and could also cause investors to reassess ETFs as a result.
In addition, considerable interest in actively-managed ETFs from providers and industry participants was completely premature, she said.
"We're probably not there yet in the market to really go down that path," she said.
"People need to understand the passive style of ETFs first and we don't think it's something investors need at this point."
Many of the large global ETF providers were demonstrating a focus on educating advisers, she said. "It will happen, it's just a matter of how long [it will take]," she said.
Advisers should view the upcoming Russell ETFs as building blocks for portfolios, she said.
"Depending on the type of risks and the type of bonds an investor wants in their portfolio, they can really tailor that suite to meet their needs," she said.
"By June, we should see a lot of choice for investors to really start to build out their defensive portfolio with fixed-income ETFs."
