betashares/investment trends 2016 exchange ... - etf australia€¦ · provide a good core of...
TRANSCRIPT
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 1
BetaShares/Investment Trends2016 Exchange Traded Funds Summary Report
Deep Insights Research Report released: December 2016 Reproduction Prohibited
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 2
© Copyright 2017 Investment Trends Pty Limited. All rights reserved.
The material in this Report (“BetaShares/Investment Trends 2016 Exchange Traded Funds Report: Summary Report”) contains proprietary information including copyright material and trademarks, the rights to which must be respected. Investment Trends owns the copyright in the design, selection, arrangement, production, and presentation of the Report, as well as in the material originally developed by or for Investment Trends. You may use copyright material for your personal or internal use within your business. Otherwise, and except as permitted by law, no copying, publication, modification or commercial exploitation of the Report is permitted without the prior written permission of the owner.
Except for any rights under any legislation in Australia or any other relevant jurisdiction which cannot be excluded or limited, Investment Trends does not provide a warranty with the Report or give an assurance as to its accuracy or reliability. Investment Trends shall not be liable for any damages you suffer, or which are claimed against you by a third party, arising out of use of the Report. You should particularly note that most of the issues covered in our Report(s) are in a continuous state of change and are likely to be appropriate only for the timeframe indicated. As such you must make your own enquiries regarding any aspect of the Report or research that you may seek to rely on and not rely solely on the Report for any purpose. You should also note that we rely on information provided to us through various research and data collection methods and whilst we have made our best endeavours to ensure reasonableness and accuracy, we have not audited the information and do not audit claims.
Analysis: Mark Johnston, Executive Chairman & FounderMichael Blomfield, CEODr Borhan Uddin, Director of Statistical ResearchRecep III Peker, Research DirectorCalvin Yap, AnalystMinh Phan, Analyst
Audience: Current and next wave investors of exchange traded funds
Financial planners
Data collected: August – September 2016
Collection method: Online surveys
Disclaimer
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 3
Research methodology
Dynamics and growth of the ETF market
Profile of ETF users
SMSF use of ETFs
Financial planners’ use of ETFs
Recap of key themes
Agenda
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 4
Research methodology
The September 2016 Exchange Traded Funds Report is the 8th annual study into the Australian ETF market and is based on two detailed online surveys.
1. The Investor Product and Marketing Needs surveyThis survey was conducted between August and September 2016 among two main groups of investors:
i) Respondents from Investment Trends’ opt-in panel who had taken part in previous investment related research.ii) Investors recruited from Investment Trends’ institutional clients, including a diverse range of investor information providers, product
providers, private banks, advice networks, and online brokers.
Close to 9,000 valid responses were received, including 1,400 respondents who were currently using exchange traded funds (ETFs), with a further 378 next wave ETF investors (who were currently considering, but not yet using ETFs). The maximum sampling error for current ETF investors at 95% confidence interval (centre of the range) is +/- 2.6%. Analysis of smaller subgroups will have a higher sampling error.
2. The Adviser Product and Marketing Needs survey This was a detailed quantitative survey of financial planners, dealer group managers and RG146 compliant accountants conducted between July and August 2016. The survey was conducted in two phases:
i) Core sample: Invitation emails were sent to planners who had previously participated in Investment Trends’ research. This was supplemented with invitations sent by Financial Standard, Money Management and Morningstar to their full databases of financial planners and associated professionals.
ii) Additional sample: Once the core sample was completed, a number of individual fund managers, ETF providers, and platform providers also invited planners on their own database to participate. These responses have been utilised where appropriate.
Total responses after data cleaning, de-duplication, and validation: n=592 financial planners, including RG146 compliant accountants, and dealer group managers who personally provide advice. The maximum sampling error (centre of the range) at the 95% confidence interval for this sample is +/-4.0%.
Responses to the survey were post weighted to ensure a representative sample with correct distribution by platform used, planning software used and dealer group.
Dynamics and growth of the ETF market
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 6
The number of ETF investors grew at an annualised rate of 31% in the 12 months to
September 2016
0
5
10
15
20
25
30
Market capitalisation of ETFs ($bn)
ETF market size
9.5k19k
38k53k
60k69k
102.5k
146k
202k
265k
315k
258k
Projection^
Projection for 2017
Projection in previous study
^Note: Projected figures based on Investment Trends modeling. Note that actual outcomes will be influenced by a range of factors, but particularly share market performance. Sourced from Investment Trends 2016 ETF Report.
Ma
rke
t c
ap
itali
sa
tio
no
f E
TF
s (
in $
bn
s)
Number of ETF investors
Number of ETF investors – projected outcome
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 7
Repeat investment into ETFs remains very high among current ETF investors
55%51%
69% 70%
79%
71% 70%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec-10 Dec-11 Nov-12 Nov-13 Oct-14 Oct-15 Sep-16
Proportion of current ETF investors who are considering re-investing in ETFs in the next 12 months
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 8
The majority of investments into ETFs represent new money into the industry
25%
9%
27%
50%
Direct shares:
Managed funds:
Cash & TDs:
Nothing, incremental investment:
What investments do next wave ETF investors plan to sell down to invest in ETFs?
(proportion citing each)
29%
10%
14%
56%
65%
27%
16%
Direct shares:
Managed funds:
Cash & TDs:
Nothing, incremental investment:
Direct shares:
Managed funds:
Cash & TDs:
What would current ETF investors have invested in, were ETFs not available?
(proportion citing each)
What investments did current ETF investors reduce usage in order to invest in ETFs?
(proportion citing each)
Profile of ETF users
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 10
A third of ETF investors are currently retired, with the typical ETF investor being
51 years old
Profile of current ETF investors:
One in three are retired
51 years old, on average
38% invest in ETFs via an SMSF
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 11
ETFs are becoming more mainstream, with younger investors increasingly embracing
these products
Profile of current ETF investors
Average
age
% investing in
ETFs via
an SMSF
Investable assets
as a multiple of the
average investor
By When investors first started investing in ETFs
58 5853 54
4739
45%55%
43%50%
29%
13%
More than
5 years ago
[n=136]
4-5 years ago[n=81]
3-4 years ago[n=97]
2-3 years ago[n=131]
1-2 years ago[n=213]
Less than
a year ago
[n=135]
1.5
1.2 1.1 1.00.8
0.4
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 12
37%
31%28%
0%
10%
20%
30%
40%
50%
60%
70%
Millennials Gen X Baby boomers
Proportion of online investors who currently use or intend to use ETFs in the coming year
Usage by millennial investors is expected to be a significant driver of future
ETF growth
Source: Investment Trends 2016 Australian Online Broking Report
SMSF use of ETFs
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 14
Use of ETFs among SMSFs and non-SMSFs continues to grow strongly
(more so among non-SMSFs)
^Source: Investment Trends SMSF Investor Reports
21k 19k 24k
39k45k
53k59k 60k
66k 69k82k
103k120k
146k
181k
202k
220k
265k
11k 10k12k 20k 23k 27k 31k 30k 32k 33k 38k 46k 54k 63k
76k 83k 90k 100k
0
50
100
150
200
250
300
ETF market size among SMSFs
Number of investors holding ETFs (incl. SMSFs)
Number of SMSFs holding ETFs (via their SMSF)
51% 50% 50% 51% 51% 51% 52%49% 49% 48% 46%
45% 45%
43% 42% 41% 41%
38%
Number of investors holding ETFs (incl. SMSFs)
Number of SMSFs holding ETFs (via their SMSF)
% of ETF investors holding ETFs via their SMSF
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 15
SMSFs who use ETFs typically cite a wider range of reasons for using them,
especially for access to overseas markets and access to specific investment types
77%
59%
47%
34%
35%
32%
23%
18%
20%
17%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Diversification
Access to overseas markets
Low cost
Avoiding risk through individual stock exposure
Liquidity/easy to buy and sell
Access to specific types of investments
Easier to access than unlisted managed funds
Provide a good core of investment portfolio
Trading flexibility
Cost effective for large investments All current ETF investors [n=945]
SMSFs who use ETFs [n=332]
Q125 Why do you use ETFs? (Multiple responses permitted) SMSFs who hold ETFs versus current ETF investors (Top 10 reasons shown)
Financial planners’ use of ETFs
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 17
15%25% 27%
31% 28%33%
40% 44% 43%17%
19%
27% 16% 19%17%
19%20%
16%
15%
11%
9%
12% 10%11%
9%
9%10%
53%45%
38% 41% 43% 40%32%
27%31%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008[n=487]
2009[n=305]
2010[n=561]
2011[n=635]
2012[n=486]
2013[n=466]
2014[n=442]
2015[n=417]
2016[n=381]
Don't intend torecommend ETFs
Don't currentlyrecommend, but mayafter 12 months
Don't currentlyrecommend, but maywithin 12 months
Currentlyrecommend ETFs
Q56 Have you used exchange traded funds/exchange traded managed funds for your client investments? Among financial planners
Seven out of ten planners currently recommend ETFs or intend to do so in the future
47% 55% 62% 59% 57% 60% 68% 73% 69%
Currently recommend/
intend to recommend:
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 18
Use of ETFs is widespread among financial planners, with 7500 advising on ETFs
2200
35003800
45004000
4800
7000
7600 7500
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
2008 2009 2010 2011 2012 2013 2014 2015 2016
Planners currently advising on ETFs
In 2016, this represents:
44%
60%
79%
Of all planners Of planners who are
accredited to advise
on direct listed
equities
Of planners who
invested new client
money into direct
listed equities
over 2016
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 19
Planners who currently recommend ETFs are using these products more extensively
for new inflows, and plan to continue to grow their use
P = Planners estimate of figures in 3 years’ time
7%
9%
13%
17%
23%
4%5%
6% 6%
10%
0%
5%
10%
15%
20%
25%
30%
2013 2014 2015 2016 2019 (P)
Average % of inflows in ETFs among planners who recommend ETFs [n=107]
Average % of inflows in ETFs among all planners [n=335]
Q16 In the last year, roughly what proportion of the new client inflows you advised on went into ETFs? & Q17 What do you think these figures will be in 3 years? Averages among financial planners
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 20
Planners who recommend ETFs cite low cost as the top reason for using ETFs,
while diversification is the stand out driver among ETF investors
51%
72%
29%
52%
25%
94%
77%
58%
55%
45%
100% 80% 60% 40% 20% 0% 20% 40% 60% 80% 100%
Low cost
Diversification
Liquidity/easy to buy and sell
Access to overseas markets
Access to specific types of investments
Top 5 reasons for using ETFs Current ETF investors versus Planners who recommend ETFs
Current ETF investors [n=946] - LHS Planners who recommend ETFs [n=157] - RHS
Note: Background represents 2015 results
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 21
7k 15k 17k 18k 27k 39k 49k 57k
38k53k
60k69k
103k
146k
202k
265k
0
50
100
150
200
250
300
350
0
50
100
150
200
250
300
350
Dec-09 Dec-10 Dec-11 Nov-12 Nov-13 Oct-14 Oct-15 Sep-16
Involvement of advisers in most recent ETF investment
No. of ETF investors saying an adviser placed a role in their most recent ETF investment
No. of current ETF investors
18% 29% 29% 27% 26% 27% 24% 21%
% saying an adviser
played a role in most
recent ETF inv.:
There is significant opportunity for advisers to be more involved in ETF investments
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 22
Have used ETFs
& intend to continue
doing so, 43%
Haven't used, but may
after 12 months, 10%
Haven't used
ETFs & don't
intend to do
so, 26%
Haven't used, but may
within 12 months, 16%
2
3
4
5
6
7
30 35 40 45 50 55 60
Average funds under advice ($m)
Av
era
ge
le
ve
l o
f n
ew
in
flo
ws
($
m)
Q56 Have you used exchange traded funds/exchange traded managed funds for your client investments?
By Average FUA and new inflows (Bubble size represents proportion of planners in each category)
Among financial planners [n=381]
2016
2015
Planners who currently recommend ETFs typically have a higher level of
funds under advice and higher inflows
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 23
42%
38%
28%
39%
35%
18%
29%
28%
22%
22%
14%
12%
7%
6%
5%
28%
12%
16%
9%
15%
16%
0% 10% 20% 30% 40% 50% 60% 70%
International equities (Active)
Australian equities (Active)
Fixed income (Active)
International equities (Index)
Australian equities (Index)
Fixed income (Passive)
Infrastructure (International)
Property (Australian)
Infrastructure (Australian)
Property (International)
Multi-asset class
Goals-based/outcome-oriented
Smart beta
Currency
Commodities
Corporate bonds (Australian)
Corporate bonds (International)
Factor-based
Leveraged/geared
Inverse/short
Other
I don't know
Q71 Which of the following types of ETFs/ETMFs would you like to use in the next 12 months, assuming
they were available to you? (Multiple responses permitted) Among financial planners [n=379]
Clusters^:
Passive (44%)Alternatives (42%)
Active (52%)
Innovative (20%)Currency & commodities (20%)
Bonds (18%)Not part of any cluster
Note: Planners might perceive a lack of availability of these ETFs if they are not available via their dealer group/investment platform/APL etc.
^Percentages account for overlaps
Planners have a strong interest in actively managed ETFs
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 24
Key themes
Retail ETF investor numbers continue to rise rapidly despite headwinds posed by market conditions
ETFs’ ability to provide low cost, diversified solutions are being embraced by investors across the wealth spectrum, from lower balance investors to SMSFs. Usage by millennial investors is expected to be a significant driver of future ETF growth
Seven in ten planners currently recommend ETFs or intend to do so in the future. Planners who do recommend ETFs continue to allocate larger inflows into the product and plan to continue this growth
There is significant opportunity for advisers to be more involved in ETF investments
Looking forward, there is a broad appetite among planners to use a wider range of ETFs, especially products providing exposure to actively managed equities, infrastructure and property
Thank you!Questions?
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 26
BetaShares is a leading Australian manager of ETFs and other Funds that are traded on the Australian Securities Exchange (‘ASX’).
BetaShares’ aim is to provide intelligent investment solutions, which help Australian investors meet their financial objectives.
With a broad range of products now trading on the ASX, the BetaShares range of Funds is one of the largest and most diverse available in the market.
BetaShares offer investors simple to use and cost-effective access to equities, cash, currencies, commodities and alternative strategies.
As at December 2016, BetaShares manages over $3.3 billion in assets.
BetaShares is Australian owned and managed, and is a member of the Mirae Asset Global Investments Group, one of Asia’s largest asset management firms. As at December 2016, Mirae manages approximately US$100 billion globally.
About BetaShares
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 27
Investment Trends is a specialist research organisation
which provides new business insights and decision
support information to many of the world’s leading
financial services organisations. We combine analytical
rigour and strategic thinking with the most advanced
market research and statistical techniques to help our
clients gain competitive advantage.
Investment Trends is a multi-national research
organisation servicing clients in Australia, Asia,
Europe and the US.
Our clients include the industry regulators, peak
industry bodies, all of the top 6 Australian banks, top 10
investment platform providers, top 6 online brokers, as
well as most leading fund managers and industry super
funds, margin lenders, dealer groups and financial
planning software providers.
About Investment Trends
Our work is focused on helping clients answerthree fundamental questions:1. How does the market currently work?2. How is the market evolving?3. How do I improve business outcomes:
• Acquire more customers• Retain more existing customers• Increase revenue per customer• Prioritise technology and process
investments
Copyright 2017 Investment Trends Pty Led. BetaShares/Investment Trends 2016 Exchange Traded Funds Report – SUMMARY REPORT. Reproduction prohibited. 28
Sydney LondonInvestment Trends
6 London Street London, EC3R 7LP
United Kingdom
+44 203 741 [email protected]
Investment Trends23.02 Tower 3, International Towers
300 Barangaroo Ave, Sydney NSW 2000Australia
+61 2 8248 [email protected]