Exchange-traded Funds  

Robo-advisers set to aid ETF growth

Robo-advisers set to aid ETF growth

Brown Brothers Harriman study predicts further increase in usage.

Robo-advisers are increasingly considered assets to exchange-traded fund (ETF) growth in Europe, according to Brown Brothers Harriman’s (BBH) second annual European ETF Investor Survey.

Findings from the report show 54 per cent of respondents view robo-advice as a means of improving opportunities for their businesses, compared to 26 per cent who see it as a threat and 20 per cent who hold neither opinion. 

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While European ETF growth rates are relatively low compared to that seen in the US market, launches are on the rise in Europe and more advisers are beginning to consider their merits. 

The survey also shows that 7 per cent of investors hold their entire portfolios in ETFs, compared to 3 per cent last year, with 68 per cent of investors saying they would be happy to invest in an ETF with a track record of less than one year.

Andrew Craswell, vice president of global ETF services at BBH, believes the surge of interest in the products is “in line with the trend in the market place of investors of all sizes looking for lower-cost products they can use in their portfolios”.

Although BBH recognises that current figures represent a “small portion of the market”, the increase is said to “indicate that European investors are becoming more comfortable with [the] products”.

Speaking of the role robo-advisers can play where ETFs and other products are concerned, Mr Craswell said: “Advisers could use the robo-advice platform to take care of asset allocation, portfolio construction and managing money. This would allow them to focus on client relationship management, tax planning and all of the other broad services a financial adviser provides.” 

Despite the growth ETFs have seen recently, education still proves to be one of the biggest barriers to encouraging advisers to embrace the products. 

He explained: “Assets aren’t just going to flood in; it takes time. I think we’ll see an acceleration in education as more of the funds get to a point of size, but we will see new players come into the marketplace as well.”