Exchange-traded managed funds (ETMF) will experience strong market growth and take-up, particularly from SMSF trustees, as they move from traditional index investing and smart beta strategies to a newer third category.
“A lot of research and surveying that we’ve been doing has shown that there’s definitely a significant appetite for combining traditional index investing with active strategies through active exchange-traded managed funds,” BetaShares managing director Alex Vynokur told an AMP Capital media briefing today.
“Looking at the planner market, around 60 per cent of advisers are saying that they want to see them in the market and want to use them – that really reflects how people invest.
“So on one hand, we’re seeing the big secular trend of passive, index-based and smart beta exchange-traded funds (ETF) continue to increase market share, and that’s from a proliferation of more active managers, but active has always played a role in how people invest.
“Investors have embraced both index and smart beta, so we believe that the third category, active exchange-traded managed funds, will be an area that will receive and experience significant growth.”
On 8 June, AMP Capital and BetaShares listed the AMP Capital Global Listed Infrastructure Securities Fund (Unhedged) and Global Properties Securities Fund (Unhedged) on the Australian Securities Exchange, Australia’s first actively managed ETMFs.
AMP Capital head of self-directed wealth and SMSF Tim Keegan said from a financial services provider perspective, SMSF trustees’ number one conduit for investment access was their online broker.
“But that meant that they weren’t necessarily building the best portfolios to meet their outcomes,” Keegan said.
“Perhaps 10 years ago that wasn’t a problem when all the boats were rising, but certainly when talking to investors now, their attitude as to how they want to manage their portfolio and what they’re seeking has changed vastly.
“Trustees want to be informed and they want access to education – that’s been part of our raison d’être, but part of it is also talking about portfolios because whilst SMSFs have typically been very interested in individual stocks, their understanding around asset allocation and the role that it can play, in terms of investment outcome, has not been as strong.
“We can see that here is the opportunity to play the leading role in delivering portfolios that can really complement the SMSF trustee.”
He also revealed the third ETMF in the suite, the Dynamic Markets fund, will be launched shortly.
“With the research that keeps coming through, older SMSF trustees heading into retirement don’t necessarily seek quite the level of control they sought when they were younger,” he said.
“So the idea of starting to transition across to professional management, but still having their hands on the levers is very attractive to them.
“As we build out this suite of active exchange-traded managed funds, it really is the sweet spot in terms of what investors and their advisers are asking for.”
AMP Capital director Craig Keary said global listed infrastructure was a great story in terms of asset class.
“If I look at the world as it stands, it’s getting more complex, but also there are a range of other capabilities that investors should be accessing and, in particular, accessing through their SMSF,” Keary said.
“As our business continues to evolve, you’re going to see a lot more of these developments as we continue to invest in this space.”
