New research has found that exchange-traded funds have saved Australians over $300 million per year in fees through 2018–19.
According to Stockspot’s fifth annual Australian ETF Research findings, the savings figure is in comparison to active fund managers who typically charge 1 per cent per annum.
The research estimates that by 2022, ETFs will have saved Australians $660 million in fees.
Stockspot estimated that ETF funds under management (FUM) will hit $100 billion by 2022, with various factors such as downward pressure on ETF fees, the underperformance of active funds and increased awareness ETFs as an investment option fuelling the growth.
However, it also noted that many advisers still recommend high-cost active investing strategies, despite overwhelming evidence that lower-cost index ETFs are in the best interest of clients.
Stockspot chief executive and founder Chris Brycki said ETFs have become the recommended investment product of choice for independent advisers who are looking out for their clients’ best interest.
“Whether you’re investing in Australian shares, global shares or bonds, more than 80 per cent of active fund managers have consistently failed to beat the index. It’s no wonder investors are abandoning risky stock picking for the safer option of tracking the market index,” Mr Brycki said.
“Considering ETFs still only make up 2 per cent of the share market in Australia, $300 million saving is huge. This figure will increase exponentially as more Australian investors gravitate towards these wonderful low-cost wealth-building products.”
The Stockspot research analyses over 190 ETFs and looks at factors like fees, performance and size (i.e. FUM), and recent market trends and investor behaviour.
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