New research from Source, one of the largest providers of Exchange Traded Products (ETPs) in Europe, reveals that 82% of IFAs believe ETFs need to be more widely available on the investment platforms they use. Some 28% say there should be a significant increase in the number of these products available on platforms to help the growth of the sector….
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David Lake, Managing Director, UK coverage at Source
The findings reveal that 42% of IFAs believe their clients have no exposure to ETFs, and around 49% estimate between 1% and 10% is invested here. However, 34% of IFAs expect their clients to increase their exposure to ETFs over the next year, compared to just 4% who expects it to decline.
Of those IFAs who have recommended ETFs to their clients, 33% have promoted pure trackers, compared to 15% who have suggested active ETFs. Some 6% have recommended smart beta ETFs, and 5% have recommended ETFs that have alternative benchmarks.
When it comes to what makes ETFs more attractive when compared to other investment products, the overriding reason according to IFAs is their low charges, and this is followed by the innovation they offer and the range of products available. The growing demand for ETFs amongst IFAs for their clients has also been fuelled by the implementation of the Retail Distribution Review (RDR). Since then, 9% of IFAs say they have significantly increased their clients’ exposure to passive investments, and 35% said they have done this slightly.
David Lake, Managing Director, UK coverage at Source, commented: “This year, we have seen our assets under management grow by 20% – $3.4 billion – and we expect strong growth in the ETF sector to continue. The bulk of investment into ETFs in Europe so far has come from institutional investors, but we expect IFAs to significantly increase their clients’ exposure to these products.
“We are well positioned to capitalise as we have just launched a multi-million pound advertising campaign to help raise our profile amongst IFAs and investors, and we have recently appointed a five-strong team to service the UK financial advisory market.”