InvestmentsJun 3 2013

Platforms told to boost ETF access to stem portfolio costs

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ByNick Reeve and Matthew Jeynes

Discretionary fund managers have appealed to platforms to improve access to exchange-traded funds (ETFs) and direct share dealing, claiming they are being forced to make potentially costly changes to their model portfolios.

Chris Peel, chief executive of Blacksquare Capital, said a lack of access to ETFs and shares on some platforms was hampering his ability to roll out new discretionary model portfolios.

“A number of platforms don’t allow trading in key ETFs, so our models have to be different on different platforms,” he said. “On some we have to buy tracker funds instead, which can be up to four times the cost to clients.”

Evercore Pan-Asset chief executive Chris Aldous said few platforms which offer ETFs and shares do so cost-effectively.

But Barry Cowan, head of platform solutions at Sanlam Private Investments UK, said the lack of availability of ETFs on some platforms has not caused him problems, as he believes tracker funds are more suitable for a model portfolio.

He said the only advantage to an ETF is the fact it can be traded daily, but this is not important for long-term investors.

Cofunds has been rolling out discretionary products since August, but does not offer ETFs or direct equities to advisers. FundsNetwork offers 50 ETFs and has partnered with four discretionary providers.

Skandia does not offer ETFs or sharedealing, but a spokesperson for the platform said such functions will be introduced in the future.