Financial advisers’ appetite for exchange-traded funds has more than doubled since the global pandemic hit as new trading data shows that index funds are providing better means of diversification.
AUSIEX research found that before COVID-19, one in five advisers trading via platforms invested in ETFs. This figure has now gone up to one in two using ETFs, as many looked to this vehicle to invest in fixed interest, REITs and international equities.
Head of product and distribution Andy Stewart said advisers are looking for alternatives in this low interest rate environment and adjusting their portfolios where necessary.
“When you think about the way planners normally operate, they don’t trade on market volatility alone. One of the key elements of going to a financial planner is that they are focused on executing on a strategy. That’s why we didn’t see the trading frenzy like we did in the self-directed segment,” Stewart said.
At the height of COVID-19, Stewart said that advisers stuck to their strategies and stayed the course, rebalancing existing portfolios where and taking a more cautious approach.
This is reflected in their trades as more advisers preferred to invest in large-cap stocks, while self-directed clients looked for opportunistic investments, he said.
Overall, some 28% of new accounts opened with AUSIEX during the lockdown period invested in ETFs during March to November 2020, AUSIEX’s new paper Australia’s trading transformation paper reveled. This fell slightly to 22.7% in the post-lockdown period.
Since November 2020, the recently rebranded wholesale trading platform has seen a 43% increase in AFSLs signing up to its direct share-trading services.
Adviser also looked to ethical products to invest in. Most of the ESG-related trading (66%) went to the BetaShares Global Sustainability Leaders and BetaShares Australian Sustainability fund.
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