The non-aligned financial advice space has been adopting actively managed exchange-traded funds at a much faster rate than their aligned counterparts, observes one asset manager.
Speaking exclusively to ifa about the recent launch of their ActiveX series of actively managed ETFs, Fidante Partners investment specialist Sam Morris said non-aligned advisers are more independent in the way they can make decisions, meaning they can move a bit faster for their clients.
“They're able to move a bit faster on research ratings and incorporating new products and strategies into their portfolios once they understand them and get their heads around how they can use them for clients,” Mr Morris said.
“Whereas I think with aligned financial planners, they're just working within bigger compliance frameworks. It takes a bit longer for them to get through the various compliance regimes, and to get the research teams and platforms on board as well.”
Remarking on the growth of active ETFs, Mr Morris said Australia is one of the only two jurisdictions in the world that really actively encourages active ETFs, the other being Canada.
He said this is predominantly due to a favourable regulator environment in both countries, accommodating and enabling active managers who want to protect their portfolio composition and delay reporting it to protect their intellectual property.
“Canada has been a pioneer in the ETF market. It was actually the market where the first ETF was launched in 1990, even before the US,” Mr Morris said.
“What we've seen is the Australian ETF market is circa $40 billion now, which has grown very rapidly in recent years, and the Canadian ETF market is about four to five times larger. Active ETFs are now over 20 per cent of that market, whereas they're below 10 per cent of our market.
“What we've seen is this example where in Canada active ETFs have become a very large part of an ETF buyer's portfolios. We're seeing that trend play out here. It started with global equities, and what we've brought to market is an active fixed income product which we think is very underrepresented in investor portfolios.”
Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.
You can contact him on [email protected].
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