Financial advisers and discretionary wealth managers in the UK are as likely to buy exchange traded funds and exchange traded products as traditional UCITS products over the next 12 months, according to a new study from ETF provider Source.

Source’s reveals investors are just as likely to choose ETFs as they are traditional UCITS products

Approximately one fifth (22%) of respondents said they are planning to purchase more traditional UCITS funds in future while 17% said more ETFs/ ETPs. Of financial advisers and discretionary wealth managers that invest in ETPs for clients, the vast majority (83%) said they had done so for more than three years. While – on average – 13% of firms surveyed had AUM in ETFs/ ETPs.

Dominic Clabby, Director, and Head of UK Retail at Source, said: “The survey shows that financial advisers and discretionary wealth managers in the UK are seeing the benefits that ETPs and ETFs offer them and their clients. Many are realising that ETPs can fulfil the same risk-adjusted portfolio requirements as UCITS in many cases, but with better liquidity and transparency at a lower cost… As more platforms allow access to ETFs and ETPs, we forecast an increasing take-up of exchange traded products by intermediaries looking to deliver effective investment solutions to their clients.”

The survey also found that approximately three-quarters (70%) of respondents cited they used equity trackers; this was followed by equity sector products (61%), commodity (54%) and fixed income (46%) products. The same number of respondents cited actively managed (24%) and Smart Beta (22%) products. In terms of their future purchasing plans, the most commonly cited ETPs were simple equity trackers (20%), commodity (20%), and equity sector (16%) vehicles.

Clabby added: “The positive sentiment towards Smart Beta products was good to see as we believe that these sorts of innovative strategies will become more significant and cost-effective for advisers and their clients.”

Source most recently launched three smart beta ETFs tracking the FTSE Rafi equity income indices, which targets high-dividend-paying stocks that have been screened to favour sustainable income.