“In buying the gold through our HSBC dealer and converting it to ETFs, we had good security and were able to minimise transaction costs for our clients while retaining liquidity. In effect, we became a market maker.
“The STW ETF offers the same sort of benefits and can also be used as a short-term tactical tool for asset allocation – wherever you are and whenever you want to, you can trade in or out.”
While in Dixon’s opinion, ETFs do not suit every type of planner, he says direct assets are far more suitable for SMSFs than managed funds.
“Listed securities are far easier from a reporting and administrative perspective. The process is more complex with unlisted managed funds,” he says.
Dixon recommends that to know which ETF is the best to use, it’s important to understand the rules underlying the product and the guarantees on liquidity for each one. In terms of ETF offerings, the providers agree that there will be more use for ETF products as the range of products broadens.
Laidlaw says: “The market here is newer and in the awareness phase. People are learning about ETFs and advisers are coming up to speed on them. An increasing range of products, and particularly non-equity based products, would be good to have.”
“The market here will evolve and is poised for strong growth, particularly because of the growing SMSF base,” she says.
Keenan says he expects to see a proliferation of new ETF providers and products in Australia as the market expands.
“I would recommend advisers review their ETF provider as they would any other provider,” he says.
The need for advisers to get up to speed on ETFs and their various applications is clearly becoming more pressing than ever. But regardless of the statistics, comparisons and predictions surrounding the ETF market here in Australia, perhaps the most telling statement about the future of ETFs as part of the adviser/client relationship comes from Chris Schween.
He says: “It’s fair to say that after embracing ETFs, I’ve become friends with my clients again.”
