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Super sector has had ‘huge vested interest’ in slowing ETF growth: ETF Securities

slowing ETF growth, ETF Securities, interest, Aussie retirement

Aussie savers have lost “hundreds of billions” due to super fund money flowing into managed funds, but the maturing ETF sector provides a light at the end of the tunnel, ETF Securities’ founder has said.

Speaking at a media briefing in Sydney on Wednesday, ETF Securities founder Graham Tuckwell said that while Paul Keating did a “fantastic thing” in introducing compulsory superannuation, the safety blanket for Aussie retirement came with a side effect.

“He did a wonderful thing by forcing the money to go in [to super] but unfortunately at the time, they didn't provide a very low-cost way of just getting exposure to the overall equity market,” he said.

“Had that been the case, Australians would have saved hundreds of billions of dollars in fees.”

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Given the large amount of money in super and a tradition of running the money through managed funds, Mr Tuckwell argued there’s been a “huge vested interested” in slowing the growth of the ETF sector in Australia.

“Because what are ETFs in a nutshell? They're simply a lower cost way of people getting a spread of investments, generally equity investments but it could be bonds, but that's it in a nutshell.”

However, he said understanding of ETFs is increasing, “thank goodness”.

As it stands, the Australian ETF market is around seven years behind Europe, which was another seven years behind the US, Mr Tuckwell argued.

“The mindset has changed in the last two or three years. It is really going to take off from here. The next five years will see enormous growth,” he said.

Continuing, Mr Tuckwell dismissed as “absolute nonsense” arguments that ETFs were “Armageddon” in terms of volatility.

Earlier this year, the World Economic Forum said ETFs are “yet to be tested in crisis conditions” and could potentially “exacerbate” any major market correction.

To Mr Tuckwell, suggestions that ETFs are “financial weapons of mass destruction”, is overblown.

“All that is happening is people are taking their money away from active fund managers who are charging them a high fee and putting it into a lower-fee product,” he said.

Super sector has had ‘huge vested interest’ in slowing ETF growth: ETF Securities
slowing ETF growth, ETF Securities, interest, Aussie retirement
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Anonymous - This is nonsense. The dividend imputation and CGT changes will have pervasive effects.....
Peter Stewart - Perhaps the above statement about wealth tied up in the family home may lead to greater use of the Pension Loan Scheme post the 1st July new launch....
TRC - So as Shortons Nett wealth is 61 million, I would imagine he would not be happy about this either as it will hit him too being the top end of town and all......
Anonymous - My 94 y.o. mother is a self funded retiree and never has had any superannuation. Fully franked dividends account for 99% of her $41,000 taxable.......