With the platform’s business into ETFs increasing by 70% since June 2014, Novia boss Bill Vasilieff said the access to the funds via platforms is an investment opportunity that is increasingly being considered by advisers.
“ETFs provide granularity and access to markets, sectors, asset classes and indices that are simply not available in tracker funds,” he said, before suggesting the rise of ETFs on the Novia platform was a sign of things to come.
However, during an interview with International Adviser, Vasilieff said there are still many IFAs who choose not to use ETFs.
“I think there are three reasons for this: firstly because of a lack of familiarity and understanding, secondly because some of the competition have tried to scaremonger advisers against ETFs, and thirdly because exchange-traded funds are seen as too technical.
“There is an education problem and I think this makes it difficult for ETFs to break the stranglehold of unit trusts"
“There is an education problem and I think this makes it difficult for ETFs to break the stranglehold of unit trusts,” he said.
Vasilieff argued that some of Novia’s competitors don’t offer ETFs because the early platforms were only built to deal with unit trusts, and therefore aren’t fit for purpose in a post-RDR world.
“Some of the other UK-based platforms haven’t got the functionality to support ETFs and so they tell advisers that ETFs are dangerous.”
Vasilieff said the majority of Novia’s advisers were choosing to use ETFs to build diversified risk-appropriate portfolios in an efficient manner for their clients.
ETFs now account for £100m ($157m, €141m) out of the total £3.75bn in assets on Novia’s platform. It provides access to the majority of ETF providers in the UK, and Novia said it is now seeing business into these funds start to rival those into investment trusts.
The most popular ETFs on the platform are the iShares JPM USD Emerging Markets and the iShares MSCI Far East Ex Japan ETF.
Novia Global, the wrap platform targeting expats, is set to launch in the next few months.