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Volatility

Adviser demand for minimum volatility ETFs increases following market turbulence, says iShares

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iShares, the exchange-traded funds platform of BlackRock, saw the number of advisers using its ETFs on wrap platforms increase in Q2 2013. 

 
Minimum volatility funds, along with longer dated corporate bonds, were popular in the second quarter of the year.
 
iShares’ assets, taken from a cross section of nine major wrap platforms including Ascentric, AXA-Elevate, Fidelity FundsNetwork, Novia, Nucleus, Raymond James, Standard Life, Transact and newly added 7IM, reached GBP1.04bn in Q2 2013. 
 
Key drivers for this increased uptake include:
 
Continued interest in developed market equities: ETFs providing exposure to developed equity markets remained popular as advisers favoured developed over emerging markets, a trend continued from Q1 2013.  Demand for the iShares FTSE 250 UCITS ETF was strong as advisers looked to express this view.
 
Investors turned to minimum volatility for a smoother ride during recent market flux: The strategy remained a popular option for investors wishing to take steps back into the equity markets whilst minimising exposure to market volatility. The iShares MSCI World Minimum Volatility UCITS ETF saw inflows of approximately GBP2.5m on platforms during Q2 2013.
 
Confidence in longer dated corporate fixed income returned: Whereas short dated corporate bonds proved popular in Q1 2013, longer dated corporates dominated inflows in Q2 2013 with just over GBP100m inflows throughout the quarter. Conversely, investors switched from favouring longer dated gilts to shorter dated gilts, with the iShares UK Gilts 0-5yr UCITS ETF seeing net inflows of GBP21m. 
 
Pollyanna Harper, head of intermediary sales UK at iShares, says: “As we move through the year we’re encouraged to see the increased use of ETFs by advisers on UK platforms.  Uptake continues to grow as platforms and providers continue to work closely together to ensure investors can use ETFs to implement their investment views easily.  We expect these efforts to increase the usage of these simple and transparent investment vehicles by the adviser community.”
 
Hugo Thorman, managing director of Ascentric, says: “These results show the continued importance of ETFs in providing advisers and discretionary fund managers with low cost access to a range of markets. iShares ETFs on the Ascentric platform were up 72 per cent compared to the same period in 2012, and with assets up 45 per cent since the start of the year, we expect to see this growth trend continue.”

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