After the Hayne Royal Commission many advisers decided to steer away from large dealer groups in favour of becoming self-licensed. In the last six months, however, that trend has taken an abrupt turn.
While known for being the flagbearer for financial product providers, the Financial Services Council is now making serious inroads into the financial advice sector.
Global X ETFs are coming to town
The power of passive investing has been on show during the pandemic. Combined with the ease of implementation and a flood of new investors entering the market, the exchange-traded fund (ETF) sector has been growing at 40 per cent a year. Such has been the success that the Australian market reached $113 billion in June this year.
While still relatively small by comparison to the likes of Magellan and GQG, which manage over $100 billion each, there is little doubt that ETFs will remain among the fastest-growing parts of the market. As it stands, Vanguard and Blackrock’s iShares dominate the market, with around $31 and $21 billion in assets under management respectively.
Now Global X is coming.
Global X was founded in 2008 and is part of the Mirae Asset Financial Group, which itself manages more than US$620 billion ($873 billion) for investors around the world. Best known for its thematic and income-oriented ETFs, of which there are more than 80 currently trading on US stock exchanges, Global X is committed to providing financial advisers with a simple option to gain exposure to major disruptive forces for their clients.
The diverse range of listed products includes ones associated with disruptive technology, like video games and blockchain, or those seeking an exposure to specific parts of the Chinese market; one of the key benefits of an Asian-founded business coming to the domestic market.
The most popular ETFs, and those likely of most interest to Australian investors, include the group’s Disruptive Technology, Physical Environment and People and Demographics suites. Within “disruptive technology,” Global X manages both a Lithium and Battery (LIT) and Blockchain (BKCH) technology fund.
Yet it may well be in its “physical environment” suite that advisers see the most opportunity today. The group is “committed to offering solutions that include companies who are at the forefront of improving the world’s environment,” and likely meet the growing ESG requests of consumers. This includes exposure to Hydrogen (HYDR), clean water, wind and solar.
Global X is also positioned in the middle of the decarbonisation trend, with the US Infrastructure Development ETF, aptly named PAVE, recently hitting US$5 billion ($7 billion) in assets under management, boosted by President Biden’s infrastructure bill. One of the more interesting options is the Ag technology and Food Production ETF (KROP) which seeks to support the more efficient production and distribution of food.
This is rounded out by the people-focused strategies, including exposure to the most powerful societal trends in the developed world, an ageing demographic (AGNG) ETF and a Telemedicine (EDOC) ETF. The launch will be accompanied by significant research and education resources to assist in educating clients of all backgrounds.
