Financial analyst David Bassanese believes many Australian investors could revolutionise their portfolios – slashing costs and increasing simplicity – by discovering one of the best kept secrets in the financial industry, exchange-traded funds.
"ETFs are simply listed indexed funds, enabling investors to buy exposure to the overall Australian or international equity market, industry sectors, bonds or even gold – just as they would with company shares,” says Bassanese (pictured). “However many investors haven’t heard about them as due to their low management fees and lack of product commissions, financial planners and superannuation funds have been slow to embrace them.”
Around 70,000 Australians now own ETFs, and the market capitalisation of ETF-type products has grown strongly in recent years – by 50 per cent last financial year alone – to AUD7.7bn. Yet despite their advantages, still only seven per cent of the 480,000 self-managed super funds use ETFs, and only one per cent of the 6.7 million investors that own shares more broadly. ETFs account for a mere 0.4 per cent of the AUD2trn funds management industry.
To redress this information gap, Bassanese is set to launch Australia’s first comprehensive independent book on the local ETF industry, titled The Australian Investor’s Guide to Exchange Traded Funds (ETFs). Bassanese’s book reviews the almost 90 ETF-type products now available on the Australian market, and offers ETF trading and investment tips. The book includes examples of highly diversified model portfolios, with effective management fees up to 10 times less expensive than many actively managed retail funds.
With the looming abolition of financial planning production commissions, the growing role of SMSFs, and widespread evidence that few active managed funds consistently beat index funds, Bassanese believes ETFs could be poised to revolutionise Australia’s financial system.
The book is being sold as a downloadable e-book only, and only from Bassanese’s website. This will enable the book to be updated regularly as the local ETF industry evolves.
