SMSFs’ ETF usage skyrockets

The number of SMSFs holding exchange traded funds (ETFs) increased considerably in the 12 months to November 2013, according to new research from Investment Trends.

In that month, 46,000 SMSFs held ETFs, up 39 per cent from 33,000 in November 2012.

The BetaShares/Investment Trends November 2013 ETF Report found the number of ETFs held in SMSFs increased in line with a general upswing in ETF investment of almost 50 per cent over the 12-month period.

Historically, about half of ETF users are SMSF investors; however, that proportion has declined slightly, Investment Trends senior analyst Recep Peker said.

“This suggests more mainstream investors are entering the ETF market,” Mr Peker said. “It is no longer the highly sophisticated investors.”

Forty-thousand new ETF investors joined the market over the 12-month period, a significant number that is expected to double in the next 12 months as more mainstream investors come to market.

There will be 79,000 in the next wave of ETF investors – those planning to invest in the coming 12 months – according to the report.

“Current ETF investors are wealthier and more sophisticated, with an average portfolio size 30 per cent larger than the national average,” Mr Peker said.

“However, the next wave has an average portfolio size in line with the national average,” he said.

“This shows the next wave of ETF investors are more mainstream and not necessarily sophisticated investors,” he added. “ETFs are slowly becoming a more mainstream product.”

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