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IFA appetite for ETFs set to boom, poll suggests

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The majority (94 per cent) of independent financial advisers expect their use of exchange-traded funds to increase in the next 12 months, according to a poll by iShares and Ascentric.

The majority (94 per cent) of independent financial advisers expect their use of exchange-traded funds to increase in the next 12 months, according to a poll by iShares and Ascentric.
 
The poll of 87 IFAs carried out at road shows in Bath, Warrington and London also found that 38 per cent of IFAs currently use ETFs and, of those, 50 per cent do so on a regular basis.

Of the remainder who do not currently use the products, 62 per cent said that this was because they do not know enough about ETFs, with a further 13 per cent stating that they currently find ETFs difficult to access.

Eighty eight per cent of those who employ ETFs and 98 per cent of those who currently do not expect to increase their use of the products in the next 12 months.

When asked which were the key attractions of ETFs, all groups of respondents picked out their low-cost structure as the most important aspect of the product, followed by their precise market exposure and high levels of product transparency

Those who currently use ETFs employ them in a range of investment strategies: 39 per cent use ETFs for strategic asset allocation, with 32 per cent for more tactical and short-term exposure to markets and asset classes, and 29 per cent use ETFs to provide core market exposure for their portfolios.

The advisers who do not currently use ETFs agreed that more education is needed about how they work, the range of products available and which investors they are most suited to.
 
Andrea Morresi, head of European sales at iShares, says: ‘Our poll gives a clear indication that IFAs increasingly appreciate the key attributes of ETFs and that the uptake of ETFs by retail intermediaries will only rise. What is missing is further education on how the products can be employed within portfolios and the range of markets ETFs can be used to access.
 
‘This education requirement has become even more pressing with the publication of the Retail Distribution Review, which stated that ETFs ‘should be considered when deciding which products are suitable for a retail client’. iShares is committed to improving levels of awareness of ETFs in the investment community by road shows such as these, educational materials and ongoing research.’

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