<\/p>\n
You can also listen to this podcast on iono.fm here.<\/p>\n
SIMON BROWN: I\u2019m chatting with Niki Giles, head of strategy at Prescient Fund Services.<\/p>\n
Niki, appreciate the time. If we look at ETF growth in South Africa, we\u2019re seeing some fairly significant numbers. We are approaching, I think, R300\u00a0billion in assets under management. In a recent piece you put out you talk around how a lot of this growth is really coming from the retail investor.<\/p>\n
NIKI GILES: Hi, Simon. Yes. Thanks for having me. We have been doing a small amount of research, but we\u2019re also quite active in the market, and what we\u2019re seeing is that there\u2019s definitely been an uptick over the last two years in retail investors accessing ETFs.<\/p>\n
Read:
Alexforbes grows AuM to R733bn
Sygnia lifts interim dividend as AuM top R460bn
Ninety One\u2019s assets hit record R3.9trn as inflows return<\/p>\n
SIMON BROWN: Some of it is, I would imagine, as simple as the likes of EasyEquities, the SatrixNow \u2013 which is white-labelling EasyEquities.<\/p>\n
But also, tax-free must help, and maybe just general retail investor awareness and sort of becoming smarter around product ranges.<\/p>\n
NIKI GILES: Yes, I think definitely the likes of ETFSA, the likes of EasyEquities, SatrixNOW have all helped in this space, making ETFs accessible to the retail investor.<\/p>\n
I think that was really the issue \u2013 why a lot of investors weren\u2019t going into ETFs. It\u2019s just pure access.<\/p>\n
SIMON BROWN: And part of it, I imagine, is advisors who, to my sense, are perhaps a little slower and still very much on the unit trust bandwagon. It\u2019s what they know, I suppose. They\u2019ve got the list platforms, the trading fee structure.<\/p>\n
Are advisers coming to the party much yet, or are they, as it seems, more on the unit trust space?<\/p>\n
NIKI GILES: Look, I can\u2019t say that the advisors are slow from an uptake perspective. It may be more a structural issue for them, so they don\u2019t necessarily have access for their investors whom they\u2019re advising.<\/p>\n
That comes down to changes that need to be made to some of these platforms that they use currently, like your list platforms that you mentioned, because ETFs can\u2019t trade easily on those platforms.<\/p>\n
Read:
The growth of ETFs and passive investing since 2000
From ETF investor to Satrix CEO
Passive, active or both? How ETFs are becoming SA\u2019s most powerful long-term investment tool
Global investing platform enters SA, targeting advisors and wealth managers<\/p>\n
SIMON BROWN: Absolutely. Part of the beauty of an ETF is that it trades on the exchange. But of course, that\u2019s a hindrance for the advisor.<\/p>\n
What we\u2019ve also seen is the rise of active ETFs, which I think are now approaching three years. I think it was late 2023 when they first came to market. We\u2019ve seen a lot coming in that space, particularly in this year so far.<\/p>\n
NIKI GILES: Yes, I think that\u2019s where a lot of this retail growth is coming from \u2013 and also why there\u2019s so much retail growth. We\u2019re looking at over 50 active ones that have been listed so far since 2023.<\/p>\n
A lot of that has happened in this year, as you mentioned. So if you look, every month there\u2019s one, maybe two, new AMETFs [actively managed exchange-traded funds] being listed.<\/p>\n
A lot of those are also well-known names now that are coming to market. And so your investor who is used to those names in the unit trust space is now seeing them in the ETF space as well.<\/p>\n
Read:
Could we see US$-priced ETFs on the JSE?
Anchor Capital lists two active ETFs on JSE
JSE lists AI-focused actively managed ETF
JSE expands global ETF suite with Japan and Europe listings<\/p>\n
SIMON BROWN: Absolutely. Coronation, Allan Gray \u2013 the two big names. Ninety One has some of their income unit trusts, which they\u2019re also doing [as] actively managed ETFs.<\/p>\n
I imagine for them, you make the point, it\u2019s about brand. We all know the brand, and then it\u2019s about the distribution. It\u2019s why not put it on to an actively managed ETF?<\/p>\n
NIKI GILES: Exactly. So that I think from the asset managers\u2019 perspective it\u2019s why you\u2019re seeing it. It\u2019s just another form of distribution for them. They\u2019re seeing that there are these DIY investors who are going via some of these newer neo-broker platforms, et cetera, on to exchange-traded funds. So this is a way of them accessing those investors.<\/p>\n
Read:
Ninety One to list income-focused ETFs on JSE
Actively managed ETFs signal a new chapter for investors<\/p>\n
SIMON BROWN: I can almost see a time, when a new unit trust is released [to] simultaneously do the active ETF. There is just no reason not to, I think, in many places.<\/p>\n
We also get a lot of range. We\u2019ve some CPI-plus, we\u2019ve, of course, AI ones as well. We\u2019ve got the just general multi-asset. In one sense it\u2019s glorious for the investor. I suppose it can also perhaps for a newbie be a little overwhelming, but it is that maturing where we are spoiled for choice.<\/p>\n
NIKI GILES: Yes, we are. But you must remember it\u2019s also a very small universe. When you look at the universe of unit trusts that are available, there are hundreds of them \u2013 probably over thousands of them \u2013 whereas in the ETF world, as I said, from an active one there are only 50.<\/p>\n
So yes, it sounds like there\u2019s a lot of choice, but not really that many.<\/p>\n
I think we will see more coming with more optionality, more choice, more asset classes being included, and different options for our investors \u2013 which is great for the brand of AMETFs.<\/p>\n
And I think it\u2019s almost a virtuous circle. The more you see them listing, and the different types you see listing, the more they will create interest for investors and their advisors.<\/p>\n
SIMON BROWN: Got you. And ultimately some might think may be that unit trusts are falling behind in a sense. But truthfully, if you\u2019re a fund manager you\u2019re agnostic. You don\u2019t really mind where the person is accessing your product \u2013 as you mentioned a moment ago. If you\u2019re Coronation, you want investors using your services. You don\u2019t mind which way they come to you.<\/p>\n
NIKI GILES: That\u2019s right. I think you do need to remember \u2013 if you are going to list an ETF, or if you\u2019re going to launch a unit trust \u2013 you still need to know who your investors are.<\/p>\n
So it\u2019s pointless making something available as a unit trust or as an ETF listed vehicle if the investor that you\u2019re targeting is not going to access it via that distribution method.<\/p>\n
So you do still need to look at who you are targeting from an investment perspective. But this is allowing a greater universe of investors.<\/p>\n
Read:
An amazing year for ETF investors
Bitcoin\u2019s bear market deepens as ETF investors yank $870m<\/p>\n
SIMON BROWN: Prescient, obviously, is the platform behind many of these actively managed ETFs that have come to market. Is there a world perhaps where the sort of actively managed is an easier, perhaps a better structure versus a unit trust, or are they just apples and oranges and there will always be different beasts that serve their purposes?<\/p>\n
NIKI GILES: You must remember at the base of them there are unit trusts, both of them. It\u2019s just really an access perspective and then a little bit to do with transparency and maybe how you trade them. So I think they\u2019re apples, actually, just a red one and a green one.<\/p>\n
So it\u2019s going to come down to \u00a0how you want to trade, how you want to access these. Some of them have benefits. As I say, unit trusts are fractional, so they\u2019re very easy to put on a list. ETFs trade on the exchange, but you can trade them intraday.<\/p>\n
So they each have their own positives \u2013 and negatives as well. And so I think it\u2019s just going to come down to who you are targeting and what makes the most sense.<\/p>\n
Read:
etfSA unveils new actively managed \u2018Balanced Foundation\u2019 ETF
As fund net inflows reverse, Coronation launches ETFs<\/p>\n
SIMON BROWN: Yes, and which works for the investor. I suppose that\u2019s really where we want to be, that that retail investor gets the choices to benefit for them.<\/p>\n
We\u2019ll leave it there. Niki Giles, head of strategy, Prescient Fund Services. appreciate the time.<\/p>\n
#rise #retail #investors #active #ETFs<\/p>\n","protected":false},"excerpt":{"rendered":"
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