SMSFs continue to invest in ETFs

Mr Alex Vynokur, Betashares CEO, told SMSF Adviser that even though SMSFs were among the earliest adopters of ETFs in Australia, their appetite for the convenient and cost-effective investment vehicle has continued to grow, reaching a new record high again this year.

The report revealed that nearly 45 per cent of all members of an SMSF have exposure to an ETF – a significant percentage that continues to grow as the adoption of ETFs to meet retirement goals also grows.

Mr Vynokur said there are three key reasons SMSFs are turning to ETFs as an investment option.

“First of all, SMSFs are using ETFs as a tool to gain exposure to a greater range of asset classes and investment styles,” he said.

“This trend started when ETFs first democratised access to international equities and is now playing out for fixed income, Australian equities, thematic exposures, equity sectors and other asset classes.”

Second, ETFs are being used by SMSFs to replace higher-cost active managers and unlisted funds as these investment vehicles very often cannot match the convenience and after-fee performance of ETFs.

Finally, SMSFs are looking for greater diversification and are using ETFs to replace single stock holdings in their Australian and international equities allocations.

“Alongside broader mainstream adoption, we expect continued adoption of ETFs by SMSFs as more people look to the investment vehicle to progress on their wealth creation goals,” he said.

“As a result of this ongoing growth, we expect half of all SMSF members will have exposure to ETFs in the coming years to help grow their retirement savings.”