Advisers becoming increasingly sophisticated in ETF usage

A recent survey by iShares, the Exchange Traded Fund (ETF) platform of BlackRock, shows that advisers are using ETFs to access a broader range of asset classes, as they develop their understanding and usage of the products in preparation for a post Retail Distribution Review (RDR) world.

The survey conducted by iShares at several educational ETF road shows held throughout the UK, shows that, as well as being predominately used to access equity markets, ETFs are being increasingly used by advisers to gain exposure to fixed income and commodities. 

The findings from the survey show:

60% of advisers use ETFs to gain exposure to international, domestic and emerging equity markets;

32% access fixed income and commodities markets through ETFs;

76% use ETFs as a core element of their market exposure or for strategic asset allocation, and not simply as a means to gain quick access to markets. 24% continue to use them tactically to gain quick access to different markets;

Only 8% of advisers currently use ETFs to provide leveraged exposure to markets, for short positions or to track alternative asset classes.

David Gardner, head of Northern Europe for iShares, said: "The survey findings show advisers are branching out from the traditional equity usage of ETFs into a broader variety of asset classes such as fixed income and commodities. This indicates they are now more familiar with the usage and implementation of ETFs, whether as a tactical tool or, as is increasingly evident, as a core part of their investment strategy."

Mr Gardner added: "Over the past 18 months there has been a wave of products brought to market, encouraging advisers to explore subsectors that they may not previously have considered. These survey results are evidence that IFAs are now willing to embrace the diversified exposure that ETFs offer as the industry moves towards a post RDR distribution model."

Mr Gardner concluded: "Recent statistics show that iShares has close to 75% share of the UK ETF market and the top ten ETFs by trading volume, which reinforces the need for us to take a leadership role in improving awareness of how ETFs can be used. Our focus will continue to be on investor education and addressing the challenge of bringing the entire adviser community to a point where they are at ease with the differences and benefits of exchange traded funds in the market."