2013 represents the inaugural year for inclusion of ETFs in the Professional Planner/Zenith Fund Awards. The increasing popularity of ETFs as a way to access a wide range of asset classes in a format that is cost-effective, direct and easy-to-manage for both planners and direct investors alike has seen the market grow very strongly over the past four years. Despite a slow start since the first ETF listing on the ASX in 2001, the evolution of the sector has gained velocity and now boasts a total of 86 different products and total funds under management of $8.8 billion as at September 1, 2013. A wide range of asset classes and strategies are now on offer to the investor and the growth of “smart beta” products is now beginning to blur the boundaries between active and passive strategies. Zenith’s awards in this category encompass all underlying asset classes and strategies.
Winner: State Street Global Advisors
Zenith says: State Street Global Advisors (SSgA) is an ETF pioneer both globally and domestically, having created the world’s first ETF in 1993. SSgA was also first to market locally, launching its STW fund in 2001. SSgA has significant capabilities in indexation strategies worldwide, managing in excess of $US353 billion in its global SPDR ETFs. The scale and experience of SSgA is a key differentiator for the firm in managing ETFs, where scale is usually a key driver to efficiencies. SSgA’s role as a major investment manager and its relationship to State Street Global Services (holder of $US20 trillion in custody and administration assets) creates large, deep internal and external crossing networks, which minimises trading execution costs. SSgA’s robust systems complement a sound risk management process. With ETFs being a hotly contested space, SSgA is favoured for its ability to generate simple yet robust strategies which are highly efficient, paired with the momentum of a global player.
Interview:
Three new award categories were introduced this year, including ETF Manager of the Year.
The winner, State Street Global Advisors, is the largest provider of ETFs in Australia with 11 funds across four asset classes: Australian and international equities, property and bonds. It has ambitious plans to launch several new global ETFs before Christmas.
Educating investors and advisers about the benefits of ETF investing has been a long and arduous process, which is just now beginning to pay dividends, says SSgA’s head of SPDR ETFs, Amanda Skelly.
SSgA launched Australia’s first ETF in 2001. In March, it also launched Australia’s first locally listed international ETF.
“We’re trying to build a family of ETFs that are relevant for Australian investors and we deserve to win this award because we have a long track record and we continue to deliver for our investors,” Skelly says.
“SSgA started investing in Australian ETFs 12 years ago and we’re still investing in this business.”
SSgA has around 45,000 ETF investors in Australia and manages more than $100 billion in Australian assets across the total group, including $9 billion in ETFs.
Skelly says Australia’s ETF market is still in its infancy compared to countries like the United States. However, momentum is building.
“It’s still early days, but I’ve never felt more positive about the market, and it’s exciting that people are beginning to appreciate that our ETFs have been able to deliver the market return of a strategy in a low-cost and transparent fashion,” she says.
– Leng Yeow
Finalists:
– Russell Investment Management
• First to market with “smart beta” ETFs (RDV) in 2010.
• Strong on product innovation throughout the organisation, driven by Russell’s core
capabilities around capital markets, indexation, portfolio construction and portfolio implementation.
• In-house index construction capabilities add value to ETF solutions in terms of
leveraging of existing infrastructure.
– Vanguard Australia
• Well-regarded investment team.
• Minimisation of tracking error, cost and spreads creates compelling product
efficiency.
• Product structure that frequently uses the manager’s ETFs as a unit class of existing Vanguard unlisted managed funds provides instant scale and efficiency to operations.
