State Street Global Advisors (SSGA) will continue to focus on meeting the evolving requirements of SMSF investors and providing more sophisticated education when it comes to servicing the sector this year.
SPDR ETFs Australia head Meaghan Victor said the SMSF sector had experienced exponential growth over the past five years, and as of June 2017 there were now nearly 600,000 SMSFs in Australia that managed $697.7 billion.
“SMSFs are an incredibly important aspect of the Australian superannuation landscape and we hope that as investors continue to embrace core equity ETFs, they will also move towards funds that allow them to extend into smart beta strategies and bonds, while still reaping the benefits of the cost-effective, transparent structure of ETFs,” Victor told selfmanagedsuper.
“We’re listening to what the market needs are and continually optimising our product suite to suit and meet market demands.
“For example, we know that it’s hard for SMSF trustees to access international markets and so have introduced products like WDIV, DJRE and WEMG that make it simpler, more transparent and more cost-effective for them to diversify their portfolios.”
SSGA this month celebrated the 25th anniversary of ETFs, having launched the first ever ETF, the United States-listed S&P 500 ETF Trust, in 1993.
During a recent SPDR Bites session, SSGA Asia-Pacific chief operating officer James MacNevin said: “Interestingly, one of the very first early adopters of ETFs was SMSFs.
“We saw that then and even today in Australia we have close to 70,000 investors in our ETFs and we estimate about 30 per cent are SMSF investors, and they continue to be very strong supporters, and the research we read and see backs that.
“Some of the attributes that SMSF investors are most interested in is certainly the cost efficiency of ETFs, and I think the breadth and depth of ETFs and that easy accessibility into international markets across asset classes have been a high attraction for them, as well as diversification.
“ETFs have been a tremendously powerful tool for SMSF investors.”
Commenting on the Australian market progress between 2001 and 2018, MacNevin said he believed ETFs were now mainstream and the education piece had evolved.
“But that doesn’t mean education is [no longer] a key component of ETFs now,” he said.
“We believe that we need to take that to the next level, beyond what an ETF is and what its core features and functionality are.
“There is an ongoing need to educate around how to build a well-diversified, balanced portfolio leveraging ETFs – what are the strengths and pitfalls, what do you look for in terms of product selection and so forth.
“So there’s a more sophisticated level of education as we go into the next generation of investors.”