Large licensees falling behind: AltaVista

Institutionally-aligned dealer groups are miles behind independently-owned groups when it comes to the adoption of exchange traded funds, despite growing investor and adviser demand for ETFs, according to boutique ratings house, AltaVista Research.

Michael Turner, head of sales and corporate development for AltaVista Research, said many of the traditional master trusts and wrap accounts used by large licensees did not have the functionality or flexibility to cost-effectively allow advisers to include ETFs in client portfolios and asset allocation models.

“The large advice groups have been much slower to look at ETFs than anticipated,” Turner said. “We’re having much more success helping smaller, independent groups select appropriate ETFs and showing them how to use them in portfolio construction.”

“Advisers commonly tell me that the platforms they use, and are locked into using, don’t offer a broad range of ETFs or the platform fees are too high to support using ETFs.”

Turner’s comments follow the addition of eight newly issued ETFs to AltaVista Research’s investment universe. These include new international and emerging market funds offered by State Street Global Advisors, Vanguard and Market Vector.

They join the existing peer fund groups of broad-based Australian equities, high yield, US equities and fixed income.

Turner said the inclusion of the new funds gave advisers the ability to tilt specifically to the banking sector or to global real estate, and to blend better and more diversified portfolios.