Role of ETFs to grow, says SFA committee
Exchange traded funds (ETFs) are set to become increasingly used by institutional and private investors alike, according to a Swiss Funds Association specialist committee, which stresses the standards and transparency of the asset class.
“This growth trend will increase further over the long term since ETFs can be suitable asset management components for private and institutional investors alike,” said SFA senior counsel Markus Fuchs.
As regards investor protection and transparency, ETFs have to meet more stringent requirements compared with conventional investment funds, the committee suggested.
“ETFs set high standards, particularly with regard to transparency in portfolio construction, the index requirements, and the data basis for exchange trading in fund units,” said Stephan Müller, executive director at Swiss & Global Asset Management, and chairman of the committee.
The SFA also stressed that ETFs offer a wide range of investment opportunities and offer specific client benefits, as they replicate the key indexes for equities, bonds, commodities and other asset classes and give access to numerous markets.
According to the SFA, ETFs can also be more cost-effective than many conventional investment funds, as they avoid concentration on too few individual securities and are highly transparent in terms of fund composition, performance and costs.
“In our view, new distribution channels will also contribute to making the use of ETFs more widespread. Financial advisers in Europe are increasingly offering fee-based advisory models, which tends to benefit products that are efficient and offer good value for money in particular – such as ETFs.
“This change has also been driven by the regulations, including those here in Switzerland,” said Christian Gast, managing director and head of iShares Switzerland.