Uptake of ETFs among superannuation funds has been gradual, BetaShares chief executive Alex Vynokur has said, but he expects APRA’s new heatmap to further nudge the sector towards the products.
BetaShares this week published its annual report on exchange-traded funds with researcher Investment Trends.
The number of Australian ETF investors has grown by 18 per cent year-on-year to 455,000 with a further 135,000 new investors expected in 2020.
But despite the growth of the segment, it still only makes up 1.5 per cent of the Australian investment market and adoption among institutional investors has lagged, according to Mr Vynokur.
He commented a number of funds do offer BetaShares ETFs, including AustralianSuper, on their member-direct platforms.
“Institutional adoption of ETFs is definitely growing significantly, but it is growing at a very low base,” Mr Vynokur said.
“Every quarter, when we look at our own client stats and though I can’t really speak for other firms, there are more insurance companies that are using ETFs, there are more superannuation funds that are using ETFs, family offices are definitely significantly using ETFs already. That is still growing, but it is definitely growing at a low base.”
He added the release of the prudential regulator’s new performance heatmap, which compares funds, has shifted accountability for performance and fees to super trustees.
“If you look at what specifically they’re talking about, now they’ve got a folio of index funds, ETFs and they’ve now basically written to every superannuation trustee around Australia and they say this is what you’ve got to beat, and if not, we expect you to be invested in those funds,” Mr Vynokur said.
“By the way, if you look at the fees that they assume superannuation funds are paying for that index exposure, it very closely follows ETFs.
“So that’s where APRA’s at, so I definitely would expect that continued focus to translate to greater options of ETFs and index strategies generally,” he said.
The full heatmap for MySuper products will be published on the APRA website by mid-December.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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