UK advisers demonstrate thirst for corporate bond ETFs, reveals iShares

Feb 20th, 2014 | By | Category: Fixed Income

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UK financial advisers demonstrated a thirst for yield in the fourth quarter of 2013 with high demand for corporate bond and developed equity exchange-traded funds (ETFs), according to data from ETF giant iShares.

UK advisers demonstrate thirst for corporate bond ETFs, reveals iShares

Mark Johnson, Head of iShares sales in the UK.

The latest analysis of iShares ETFs on nine wrap platforms (online portals used by advisers and investors to view and manage portfolios) indicated that corporate bonds were the most popular type of ETFs among financial advisers in Q4 2013.

iShares’ corporate bond ETFs recorded inflows of £59 million on these platforms with the iShares £ Corporate Bond 1-5yr UCITS ETF (IS15) gathering £39 million and the iShares £ Corporate Bond UCITS ETF (SLXX) gathering £15 million.

Developed equities ETFs were also popular and were the second largest group for inflows. Of the £49 million inflows into the sector, the iShares Euro Total Market Value Large UCITS ETF (IDJV) received the most interest from advisers as a simple and efficient way to invest in shares of large European companies.

iShares’ assets held on these platforms has increased by 87% in the last three years, from £557 million in Q4 2010 to £1,045 million in Q4 2013, showing considerable ETF appetite from financial advisers. iShares’ assets on these platforms increased by 23% during 2013, with the largest increases recorded on Novia and Ascentric.

Mark Johnson, Head of iShares sales in the UK, commented: “We’re encouraged that more and more advisers are using ETFs to express their allocation views on bonds as well as equities. This traction is the result of advisers becoming more familiar with ETFs over the last few years. The Retail Distribution Review has certainly been a catalyst for growth, but there is also more research and information about ETFs available now. Growth can only continue as more platforms look to make ETFs available to their clients.”

Ian Taylor, Chief Executive Officer at Transact, said: “ETFs are fast becoming one of the standard tools used by financial advisers in the UK. At Transact we seek to provide advisers with a comprehensive service that makes it easy for them to implement investment decisions and ETFs can fit squarely within this remit. Sterling bond funds are often popular on the platform but the uptick of interest in European equities suggests financial advisers may now be more optimistic in their outlook.”

iShares ETFs are available on 27 wrap platforms. This reflects trends in the assets held on nine of the major platforms: 7IM, Ascentric, AXA Wealth Elevate, Fidelity FundsNetwork, Novia, Nucleus, Raymond James, Standard Life and Transact.

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