Growing demand from retail investors for liquid, cost-effective and transparent investment solutions prompts a greater need for education on ETPs..
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ETF Securities (UK) Limited, part of the ETF Securities group, has introduced a new guide on Exchange Traded Products (ETPs) aimed at retail investors. The guide known as ‘ETPedia’ has been created in an effort to help retail investors become more familiar with these types of investments.
In April 2013, global assets in ETPs reached US$2.1 trillion1 a tenfold increase over a decade. ETPs offer efficient diversification in traditional assets, such as shares and bonds, and open up previously restricted sectors, such as commodities and emerging markets, whilst being as easy to trade as shares. Yet despite the obvious benefits, it is estimated that only about 15% of ETPs2 are owned by European retail investors and their advisers.
However, the recent introduction of the Retail Distribution Review (RDR) has led people to look into alternative investments, and a growing number of investors are embracing the use of ETPs for strategic and tactical asset allocation.
Commenting on the guide, Frank Spiteri, Head of Retail Distribution Strategy, ETF Securities, said: “With the release of ETPedia, I believe that we’ve met our aim in delivering a comprehensive, non-biased educational resource for the investing retail public. We see Exchange Traded Products (ETPs) as the investment tool of the future and with this evolution there is a need for education. Therefore, as an ETP provider we felt we had an obligation to improve the quality of educational material made available. We hope ETPedia becomes the go-to educational resource for individuals, IFAs and other key intermediaries in the retail space.
Currently, there are many misconceptions around ETPs within the retail space. An example of this surrounds liquidity and the incorrect belief that ETPs are often illiquid. For example, if we took ETF Securities’ two leading gold ETPs, which are currently the largest in Europe1and ranked their dailytrading volume vs. the constituents of the FTSE MIB they would rank 12th and 13th,making them more liquid than household names, Mediobanca, Finmeccanica and Luxottica Group. This is one of many areas where investors need to be educated and in doing so over time we anticipate ETPs becoming key building blocks in most retail portfolios.”
1 ETFGI data as at 30 April 2013
2 Ernst & Young Survey – ETF Providers, October 2012
Source: ETFWorld.co.uk – ETFSecurities
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