POWERED BY MOMENTUM MEDIA
ETFs not suited to institutional investors
|
Institutional investors have been warned against long-term investment in exchange traded funds (ETFs).
A new analysis issued by Watson Wyatt has claimed that while the development of the ETF sector has driven a great deal of product innovation, institutional investors should be considering ETFs in the same context as alternative investments.
It said this was because ETFs generally had higher fees than institutional index products, might have tax implications that required specialist advice and often contained counterparty risks for which investors might not be compensated.
Commenting on the research, Watson Wyatt senior investment consultant Chris Sutton said while ETFs were to be applauded for their substantial innovation and the way they had opened up a world of potentially interesting market exposures, the case for inclusion in institutional investment portfolios was not yet obvious.
He said the Watson Wyatt analysis suggested there were a good range of institutional passive products available in most markets that were cheaper than many ETFs.
AUTHOR
Mike Taylor
Recommended for you
A member body representing some prominent wealth managers is concerned super funds’ dominance is sidelining small companies in capital markets.
Earlier this month, several Australian superannuation funds fell victim to credential stuffing attacks, which saw a small number of members lose more than $500,000.
Small- to medium-sized funds have become collateral damage in an "imperfect" model for super industry levies, a financial institution has said.
Big business has joined the chorus of opposition against the proposed Division 296 tax.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
93.34 3 y p.a(%)
2
Global X GlobalX FANG+ ETF
37.15 3 y p.a(%)
3
GAM LSA Private Shares AU I
33.96 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
29.68 3 y p.a(%)
5
Plato Global Alpha A
28.73 3 y p.a(%)
