Skip to main content
ETF, LIC & LITs

Bell Potter ETF Report – December 2020

Style Trends from 2020 and Beyond

2020 has reminded investors of the need to remain vigilant in an environment of insurmountable data. Global uncertainties, tensions and sentiment can be hard to navigate on a day-to-day basis when this media is so readily accessible. The requirement remains however, the ability to discern what is materially relevant from those data points that are unseeingly obsolete. This landscape has seen the introduction of many active and smart beta style ETFs, which attempt to leverage an Investment Manager’s expertise or benefit from a foreseeable growth trend. December saw the launch of three new ETFs from Magellan Asset Management. Delivered at a low cost of 0.50% p.a., the funds provide a unique combination of active portfolio construction and systematic portfolio management (continued in report). The quasi style products may represent a looming convergence of the two with price competition. With passive funds required to indiscriminately buy as the market moves up and sell on the trajectory down, this combination may provide an expert assessment of investments with alpha generation and tailored cost minimisation.

Chart 1: ETF style flows as a proportion of total monthly flows

Bar Chart of EFT Style Flows as a proportion of total monthly flows

Authored by Hayden Nicholson, ETF / LIC Specialist at Bell Potter Securities, 27 January 2021

Important Disclaimer—This may affect your legal rights: Because this document has been prepared without consideration of any specific client’s financial situation, particular needs and investment objectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement with Bell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell Potter Securities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate. Nor does Bell Potter Securities Limited accept any responsibility to inform you of any matter that subsequently comes to its notice, which may affect any of the information contained in this document. This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. In the USA and the UK this research is only for institutional investors. It is not for release, publication or distribution in whole or in part to any persons in the two specified countries. This is general investment advice only and does not constitute advice to any person.
Disclosure of Interest: Bell Potter Securities Limited receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in this commission. Bell Potter Securities and its associates may hold shares in the companies recommended.