iShares, the world’s largest provider of exchange-traded funds, has reported an uptick in the amount of assets held on UK wrap platforms, signalling that ETFs are gaining greater traction with financial advisers after the introduction of the Retail Distribution Review.
Pollyanna Harper, Head of Intermediary Sales UK at iShares.
The provider, which is part of investment giant BlackRock, recorded assets of £1.05 billion held on nine wrap platforms as of the end of September 2013, a growth of 23% compared with the end of 2012.
iShares’ ETFs are available on a total of 27 platforms and this data reflects assets held on nine of the major platforms: 7IM, Ascentric, AXA Wealth Elevate, Fidelity FundsNetwork, Novia, Nucleus, Raymond James, Standard Life and Transact.
In terms of flows over the past quarter, advisers demonstrated a preference for developed market equities and shorter-dated UK corporate bonds in Q3.
Some £47m flowed into developed market equities, with mid and small-cap equities proving particularly appealing. In particular, the iShares FTSE 250 UCITS ETF (MIDD) and iShares S&P SmallCap 600 UCITS ETF (ISP6) attracted inflows. Demand for income-focused funds remained strong, with £14.7m flowing into dividend-focused ETFs such as the iShares Euro Dividend UCITS ETF (IDVY).
In the fixed income space, corporate bond ETFs were the most popular type of ETF during the third quarter, attracting inflows of £56m. Investment was focused on shorter duration funds such as the iShares £ Corporate Bond 1-5yr UCITS ETF (IS15), which provides exposure to sterling-denominated corporate bonds that are between one and five years from maturity.
The UK proved a popular investment this quarter with the iShares £ Corporate Bond UCITS ETF (SLXX) attracting inflows of around £15m and the iShares UK Gilts 0-5yr UCITS ETF (IGLS) seeing £16m of inflows, showing further appetite for UK bond exposures.
Commenting on the figures, Pollyanna Harper, Head of Intermediary Sales UK at iShares, said: “Financial advisers are becoming much more comfortable with how ETFs work and how they can be used in client portfolios. This trend is partly due to the changes brought about by the Retail Distribution Review, but equally there is much more information available now to investors and advisers alike. As a natural consequence, we’re seeing more advisers pick ETFs as a cost-efficient way of allocating to asset classes and wrap platforms are an ideal and highly effective way of accessing them.”
Andrew Smith, COO, AXA Wealth Elevate, added: “We’ve seen a steady growth in the number of advisers looking to use ETFs, and expect this to continue as the industry further evolves towards a new model for advice and fees. Our role as a platform provider is to offer access to a wide range of investment solutions so that advisers have the ability to build the portfolios that are right for their variety of clients. In response to demand, we’ve taken steps to make ETFs more readily available on the AXA Wealth Elevate platform, including lowering our dealing charges, and are working with major providers such as iShares to ensure we are providing the funds that advisers are looking for in today’s market.”