SPDR ETFs by State Street Global Advisors (SSgA) recently hosted closed sessions with brokers and independent financial advisers (IFAs) at which Dan Farley, Chief Investment Officer for SSgA’s Investment Solutions Group (ISG), discussed in detail how scalable, cost-effective portfolio solutions are needed to meet investors’ needs, particularly in today’s fast-changing market.
“The overwhelming feedback from session attendees is that there is a strong interest and acceptance of ETFs locally, with local advisers increasingly seeing the benefits of ETFs as a tool to access international markets, sectors and geographies whilst providing sustainable and diversified income streams.” Dan Farley, Chief Investment Officer for SSgA’s ISG.
“Additionally, local brokers and IFAs are acknowledging ETFs as an alternative through which to implement inflation hedging tactics that provide better returns than simple inflation linked bonds, amongst others.”
The attendees were surveyed on how they currently allocate their clients’ portfolios with the following results:
· 93 per cent currently allocating to ETFs
· 36 per cent currently allocating between 5 – 15 per cent
· 14 per cent currently allocating >25 per cent
· 40 per cent considering directing from their managed funds to allocate to ETFs
· Another 40 per cent considering directing from their cash/term deposits to allocate to ETFs
· 36 per cent would allocate more to ETFs if there was wider product availability
· 90 per cent would consider increasing their allocation to ETFs over the next 12 months
Key take outs from sessions are:
· When positioning client portfolios there is a need to diversify into global equities, especially those with sustainable income, increasing cash and fixed income and employing external Asset Allocation Managers that can assist in protecting clients from a fall in equity markets.
· Both financial planners and brokers are looking to the fee for funds under management model that is prevalent in the in the U.S., in particular Managed Account Solutions that can use ETFs, managed funds and shares.
· The business model of adviser has changed in the past 5-10 years from brokerage/trailing fees to providing clients with a more holistic service.
The sessions also included an adviser panel discussion with industry leaders which covered the asset allocation decision making process and how to successfully communicate the value add of asset allocation to the end client. The panel also looked at various implementation models, including ETFs, direct shares and managed funds.
