IFA appetite for ETFs set to boom

Exchange Traded Funds (ETFs) to increase in the next twelve months, according to a poll by iShares, the world's leading ETF provider, and Ascentric, the independent wrap platform.

The poll of 87 IFAs was carried out at road shows in Bath, Warrington and London, organised by iShares and Ascentric. The key findings include:

38% of the IFAs surveyed across the three locations currently use ETFs, 50% of whom do so on a regular basis

Of the remainder who do not currently use the products, 62% said that this was because they do not know enough about ETFs, with a further 13% stating that they currently find ETFs difficult to access

88% of those who employ ETFs and 98% of those who currently do not, expect to increase their use of the products in the next 12 months (94% of respondents in total)

When asked which were the key attractions of ETFs, all groups of respondents picked out their low-cost structure as the most important aspect of the product, followed by their precise market exposure and high levels of product transparency

Those who currently use ETFs employ them in a range of investment strategies, underlining the product's flexibility. 39% use ETFs for strategic asset allocation, with 32% ETFs to provide core market exposure for their portfolios

100% of advisers who do not currently use ETFs agreed that more education is needed about how they work, the range of products available and which investors they are most suited to.

Andrea Morresi, Head of European Sales at iShares commented: “Our poll gives a clear indication that IFAs increasingly appreciate the key attributes of ETFs and that the uptake of ETFs by retail intermediaries will only rise. What is missing is further education on how the products can be employed within portfolios and the range of markets ETFs can be used to access.

"This education requirement has become even more pressing with the publication of the Retail Distribution Review (RDR), which stated that ETFs ‘should be considered when deciding which products are suitable for a retail client.' iShares is committed to improving levels of awareness of ETFs in the investment community by road shows such as these, educational materials and ongoing research."

Shaun Sandiford, Head of Sales at Ascentric, commented: “We are greatly encouraged by the success of the road shows and received very positive feedback from advisers on the ease with which it is possible to trade ETFs on the Ascentric platform. ETFs are growing in popularity and with 67% of those polled buying this sort of investment via a wrap platform, it is important to ensure any platform selection takes this factor into account. By purchasing them through Ascentric, IFAs have access to highly competitive platform and product charges, and I have no doubt that ETFs will become a core part of our “unbiased and unrestricted” investment coverage.”