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UK fund managers urge greater understanding of ETF demand


A panel including representatives from Brewin Dolphin, Fidelity, and Novia has claimed that the increasing trend of financial advisers outsourcing investment management to discretionary fund managers (DFM) is driving the demand for exchange traded funds (ETFs) in the UK.

In turn, the panel found that platforms that can provide discretionary fund management with cost effective and granular exposures, possess a competitive advantage. 

The panel found that these claims challenge a pervading view that there is little demand for ETF amongst advisers in the UK. Fidelity’s FundsNetwork, one of the largest fund platforms in the UK, recently extended the range of ETFs on the platform to support the evolving needs of advisory firms and their clients. Meanwhile Novia has partnered with Winterflood to reduce the cost of trading ETFs on its platform, after witnessing a 70 per cent increase in the number of investors and advisers selecting ETFs as part of their investment portfolios over the past year.
Robin Beer, National Intermediary manager at Brewin Dolphin, says: “As one of the leading providers of outsourced discretionary fund management, building cost-effective portfolios without sacrificing flexibility and granularity is an ongoing challenge. For us, ETFs play a key role in delivering value to our clients. Providing advisers with risk appropriate portfolios for their clients relies on broad investment access and choice to make sure our market views are expressed in the most efficient way. We would like to see a broader group of platforms integrate ETFs into their platform offering alongside other tools to provide greater choice.”
Stuart Welch, Head of Brokerage at Fidelity International, adds: “Despite the pervading mindset in much of the industry about the need for ETFs on platforms, we are seeing growing demand from advisory firms and private investors, who are looking to include ETFs in their overall portfolios – in most cases alongside mutual funds. As we are keen to provide advisers and investors with what they need to manage their portfolios, we took the decision to expand our existing ETF offering later this year. Providing greater choice is fundamental to meeting the demands of UK advisers and investors and we see our expanded ETF range as a competitive advantage in the current environment.”
Bill Vasilieff, Chief Executive at Novia, says: “We are seeing a rise in the use of ETFs on the Novia platform, in both adviser and DFM model portfolios.  I believe this trend is set to continue as trading costs fall.  We need to break the cycle of misinformation in the market about ETFs: they are simple tools that can be used to provide access to specific markets that are not available in the unit trust and OEIC market. We are actively positioning our platform for the advisers and investors looking to build diversified portfolios, and believe that ETFs will be increasingly important in a world where investors want greater transparency and choice.”
Claire Perryman, Head of iShares Wealth Management and Retail Sales UK at BlackRock, concludes: “ETFs have challenged the status quo when it comes to investing. We continue to work with platform providers, advisers and discretionary fund managers in the UK to ensure they have the most relevant building blocks at their fingertips to construct the best investment solutions for investors. We are committed to making the process of investment smarter and smoother.”

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