SMSF advisers missing ETF boom

Exchange traded funds (ETFs) are growing in popularity among self-managed super fund investors. However, research suggests advisers aren’t capitalising on opportunities in the growing sector.

A significant number of investors haven’t been consulting with an adviser when purchasing ETFs, Ilan Israelstam, head of strategy and marketing at BetaShares, told SMSF Adviser.

“At the moment, roughly 30 per cent of advisers are recommending ETFs; there’s sort of a disconnect there,” Mr Israelstam said.

“That allows for the forward thinking adviser or financial planner to skill up [and] learn about ETFs, because one way or another, their clients, particularly those in SMSFs, will buy them.”

Research indicates advisers who advised on ETFs had higher average funds under advice and higher average new inflows in 2012. Mr Israelstam added when SMSFs or investors generally purchase ETFs, there’s a high repeat rate, meaning they’re likely to buy again.

According to a joint BetaShares and Investment Trends ETF report, 47 per cent or 33,000 of the 96,500 ETF investors in 2012 were purchasing the funds through SMSFs, indicating they are a “major force” in the ETF landscape.

“The main reason for that is that ETFs are really being adopted as a low-cost and transparent way of getting exposure to various asset classes and really as building blocks for portfolio construction,” BetaShares managing director Alex Vynokur said.

“So, from the perspective of SMSFs, the ETF allows them to execute their strategy and diversify their portfolios in a cost-efficient way.”

“Because ETFs are all quoted on the Australian Securities Exchange, from the SMSF investor's perspective it is quite easy to access, so you can execute your strategy in a low-cost and accessible way.”

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