Nick Dignam from Fortitude Investment Partners shares insights with Lachlan Maddock from Fortitude Investment Partners on how a diversified portfolio in mid-market private equity is structured. The Inside Adviser
The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
Financial advisers driving ETF adoption
BetaShares and Investment Trends released their latest ETF Report, a quantitative study of the financial advice industry based on the responses of around 800 advisers. Whilst representing only a small portion of the industry, the results of the survey were enlightening.
According to the survey, as many as 75% of the advisers that responded are now using ETFs in client portfolios or alternatively intend to ‘start adopting ETFs’ during 2021. Of that 75%, 59% are actively using ETFs to construct client portfolios, a doubling from the 27% who responded in the 2020 version of the survey.
This growth should not be unexpected, with Stockspot’s 2021 ETF report showing that there is now over $100 billion invested in ETFs, growth of 79% in the last 12 months alone.
When asked about the reason for adopting ETFs, cost and diversification remain among the key reasons, but in a change of tact, 69% of advisers indicated they are using ETFs on a more tactical basis to ‘access specific markets or asset classes’.
It is in this area where the greatest differentiation lies, with a diverse range of applications from advisers or robo advisers building entire portfolios of ETFs, to those, allocating a portion. The survey confirmed that as much as 20% of new inflows are now being allocated into the product up from 17% two years ago and 7% in 2013.
BetaShares CEO Alex Vynokur said: “The findings support our observation that investors and advisers are becoming increasingly sophisticated in their use of ETFs to achieve more targeted portfolio construction goals.”
Similarly, they are also turning to ESG in droves in the search for more ‘responsible’ investment opportunities, with the proportion advising on the growing trend hitting 40% in 2020, up from 19% in 2015. This demand is being driven by clients across all age groups. Around a quarter of retirees and pre-retirees requested their advisers to recommend responsible investing products, while one in five investors below the age of 50 did so.
