More interest in ETFs as active funds fail to deliver

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More interest in ETFs as active funds fail to deliver

Deborah Fuhr, managing partner at consultancy ETFGI (pictured), told FTAdviser the reason advisers and investors have become more interested in exchange-traded funds (ETFs) “is the fact that it’s hard to find active funds that consistently deliver alpha”.

Speaking as part of FTAdviser’s On Air panel today (25 April) on ETFs, Ms Fuhr said: “ETFs have become popular because they are a good alternative and an easy way to invest in various equity markets, fixed income and commodities. 

“You can buy exposure to gold bars just like central banks own, so it makes it very easy for you to do asset allocation.”

She added: “And I think the changing landscape of RDR has encouraged financial advisers to look at the whole of the market and have become more available and aware of what are ETFs and how they might use them.”

Ms Fuhr was joined on the panel to discuss ‘How ETFs can navigate uncertainty’ by James Butterfill, head of research at ETF Securities and Helal Miah, investment research analyst at The Share Centre.

Assets invested in ETFs/ETPs listed globally reached a new record high of $3.9tn at the end of the first quarter of 2017, surpassing the prior record of $3.8tn set at the end of February 2017, according to preliminary data from ETFGI’s Q1 2017 global ETF and ETP industry insights report.

The panel was asked why there has been a surge of interest in ETFs.

Mr Miah said retail investors are still new to ETFs.

“We are seeing growth but it is from a low base. But we are seeing a significant number of clients looking interested in the asset class,” he explained.

The panel also answered questions from advisers about the additional risks of synthetic ETFs and how to use ETFs as part of a diversified investment portfolio.

To watch the panel discussion in full and earn 30 minutes of CPD, click here.

eleanor.duncan@ft.com