Advisers turn to ETFs, especially for younger investors
More financial advisers are recommending low-cost exchange-traded funds, especially for younger investors, research has revealed.
Nearly a third (30.9 per cent) of buying volumes from advisers was directed to ETFs in 2023, according to figures released by wholesale trading platform AUSIEX, up from a quarter in 2022.
The figure was even higher for younger advised investors, with ETFs accounting for almost half (49.2 per cent) of buy trades via advisers for those aged between 18–24 – a 5 per cent increase on 2022.
For those aged between 25–49, ETFs made up more than a quarter (24.7 per cent) of the buying volumes from advisers in 2023, over the past two years.
Brett Grant, head of product, marketing and customer experience at AUSIEX, said over the past two years, ETFs have become an increasingly important part of advisers’ investment strategies, in part due to market uncertainty.
“Today, ETFs continue to offer a diversified, low-cost exposure to an index or specific thematic, allowing advisers and their clients to gain exposure to a range of asset classes in a single transaction,” he said.
"By taking advantage of ETFs, advisers can construct well-balanced portfolios tailored to the unique risk tolerance and financial goals of their clients.”
Mr Grant added ETFs are also increasingly offering advisers new ways to engage with the next generation of investors, considering the types of exposures that can now be achieved with them and how they can be aligned with individual investor values.
He said ETFs are gaining popularity with advisers for three major reasons including the ability to diversify a portfolio, as they can be used to gain exposure to an array of asset classes, investment trends thematic and regions, helping to create instant diversification for investors.
“They are also cost-efficient compared with managed funds, offering value for clients and offering liquidity and transparency,” he said.
“ETFs trade on stock exchanges like individual stocks, providing intraday liquidity. Additionally, the transparent nature of ETF holdings allows advisers to make informed investment decisions.”
