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Trustees show next level ETF usage

SMSF trustees were displaying a marked improvement in the way they assessed and compared exchange-traded funds (ETF), according to ANZ ETFS.

“The main trend we’re seeing is that SMSF investors are moving to level two,” ANZ ETFS head Kris Walesby told selfmanagedsuper.

“Australian investors continue to be very interested in yield and I don’t see that changing, but what I do see shifting, especially having spent a lot of time looking at SMSF behaviour et cetera, is the beginning of a level of SMSF investor that’s more attuned to the differences between ETFs.

“Previously, maybe two or three years ago for example, if you brought out a dividend product, the word ‘dividend’ would be enough to gain a sale for an Australian investor looking for dividend exposure.

“Now, you have a number of different products looking at dividends with their own nuances.”

Walesby said SMSF investors were homing in on the details and differences of ETFs to make more informed choices around which product was likely to provide them with the type of return profile they were seeking.

“And they’re much more discerning around what the ETF rules are,” he said, adding trustees were also cautious that they did not double up on stocks.

“If there are four similar ETFs in front of them, [they’re considering] what rules will work best for what they’re trying to achieve.

“For example, what do those rules mean when they’re applied to the stocks in the Australian market and does that mean they’re heavy in financials or not because most SMSF investors probably hold those bank stocks individually in their accounts anyway.”

Commenting on trustee ETF trading behaviour, he said it was predominantly buy-and-hold.

“We don’t see our clients doing a lot of churning and we see that SMSF investors are a bit more volatility-savvy,” he revealed.

“It’s not standardised, but with SMSF clients it’s expected that they will probably look at their portfolios realistically twice a year, potentially quarterly, but not much more than that.

“So that’s the standard routine, buy-and-hold, for any of our products from SMSF investors, for a minimum of six months – we don’t stipulate that, that’s just an expectation.

“And that’s how we sell our products as they are generally designed for long-term, stable exposures, specifically the equity products that we have.”

ANZ ETFS launched six ETFs in June following a joint venture between ANZ and London-based ETF Securities, which was a first for an Australian bank in the ETF space.

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