Advisers’ use of ETFs on wrap platforms grows, reveals iShares

May 23rd, 2013 | By | Category: ETF and Index News

iShares, the exchange-traded funds (ETF) platform of BlackRock, has revealed that UK financial advisers continued to increase their use of the firm’s ETFs on wrap platforms in the first quarter (Q1) of 2013.

Advisers’ use of ETFs on wrap platforms grows, reveals iShares

Pollyanna Harper, Head of Intermediary Sales UK at iShares.

The amount of iShares’ assets held on eight major wrap platforms – Ascentric, AXA-Elevate, Fidelity FundsNetwork, Novia, Nucleus, Raymond James, Standard Life and Transact – reached £985 million in Q1, an increase of 16% on Q4 2012.

Low-cost index products such as ETFs are benefiting from the introduction of the Retail Distribution Review, which came into effect at the start of this year. For example, iShares’ strong growth is in contrast to data released by the IMA, the UK fund management industry’s trade body, which showed that net retail sales in Q1 had fallen to the lowest level in five years.

In terms of allocation breakdown, iShares saw large demand for developed market equity ETFs, with platform inflows of more than £50 million. The firm’s FTSE 100 (ISF), FTSE 250 (MIDD) and S&P 500 (IUSA) ETFs pulled in £20 million combined.

Low-volatility equity strategies, which aim to provide exposure to equities in a less volatile way, also proved popular. The iShares MSCI World Minimum Volatility ETF (MVOL) and iShares MSCI Emerging Markets Minimum Volatility ETF (EMMV) each saw platform inflows of approximately £12 million.

However, all this was not at the expense of fixed income, as short-dated UK gilt ETFs also saw large inflows during the first three months of the year, dumbfounding expectations of a ‘great rotation’. Indeed, UK advisers appear to be very much keeping faith with fixed income, with large inflows into a range of bond ETFs.

Short-dated bond products were particularly in demand, with the iShares FTSE Gilts UK 0-5 ETF (IGLS) enjoying inflows of £41 million and the iShares Markit iBoxx £ Corporate Bond 1-5 ETF (IS15) gathering £13 million. The longer-duration version of this fund, the iShares Markit iBoxx £ Corporate Bond ETF (SLXX), also performed strongly, pulling in £20 million.

Pollyanna Harper, Head of Intermediary Sales UK at iShares, commented: “This data supports the view that we are not seeing a great rotation out of fixed income and into equities. Advisers are certainly putting money into developed market equities, and there is particular interest in minimum-volatility strategies that allow investors to dip their toes into the stock market in a measured way. But UK government bonds will remain a core portfolio holding for many.”

She added: “In the three months since the implementation of the RDR, we’re encouraged to see a steady increase in the amount of assets advisers are holding in ETFs through platforms. Advisers and investors are becoming more aware of what ETFs are and the benefits they can offer, and this data demonstrates the gradual shift taking place from understanding how ETFs work to utilising them in portfolios.”

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