New Stockspot pinwheel charts Australian ETF boom

Investors for the first time have unprecedented access to compare Australia’s booming $12.4 billion exchange-traded fund (ETF) market with a new interactive Stockspot tool covering the 94 ASX-listed ETFs.

The online pinwheel widget enables investors to drill down and compare ETFs based on fees, distribution yield, bid/ask spread and more. Stockspot has rated each one out of 5 according to strict criteria.

“One of the reasons advisors and fund managers have been able to get away with charging huge fees to clients is the fact that the finance industry has been a black box, indecipherable to the average investor,” said Stockspot founder Chris Brycki.

“Research providers charge thousands of dollars for this level of insight but we see Stockspot’s role as bringing some much needed transparency into the market.”

“Information asymmetry between the financial services industry and investors creates a moral hazard that has been rich pickings for unscrupulous financial advisors who have for too long been enriching themselves at the expense of consumers.”

The Australian ETF market hit a record high of $12.4 billion in assets under management in August, according to BetaShares, up almost 50% in a year. This is being driven by self-managed super funds seeking a simple way to build diversified portfolios that include a range of asset classes including local and international shares and bonds.

Stockspot is Australia’s first automated investment service, combining personal investment advice with sophisticated portfolio construction and a modern web-based architecture. Stockspot constructs simple portfolios of ETFs on behalf of customers to suit different risk profiles.

The new pinwheel tool, which will be regularly updated, reveals that of the 94 ASX-listed ETFs:

– 70 of them have more than $5 million under management

– Of those, average fee is $0.26% (compared to 1.91% for bank platform managed funds)

– Average yield (dividend/distribution) is 3.25%

– Average return over the last year was 9.25%

A separate study of managed funds by Stockspot found that fees ate about 45% of returns from managed funds on bank-owned platforms over the 5 years to 2013.

“Many fund managers who charge these high fees have been shown to be hugging the index like passive investment funds – so they’re charging active management fees but adding precious little value,” said Mr Brycki.

“As consumers become more informed and ETF index funds become more prominent, these index hugging active managers face being squeezed out of the market.”