Stockspot unveils ETF comparator

25-Sep-2013

By Krystine Lumanta

Email Article Print Article

Related Articles: | |

Stockspot has launched exchange-traded fund (ETF) performance tables and a proprietary ETF rating system in response to the difficulties advisers and investors have in directly comparing Australian Securities Exchange-listed ETFs.

The online ETF manager compares 22 of Australia’s 88 ETFs, which represents about 85 per cent of the ETF universe, or $6.4 billion of the $7.6 billion industry.

Stockspot founder Chris Brycki said while education material was available in the market, it was good timing to provide a means for advisers and investors to evaluate ETFs directly against one another.

“For a lot of other financial products out there, there are good comparison sites online or at least ratings agencies, but ETFs are one area that seems to have been left behind as they haven’t been fully adopted as they have been in other markets,” Brycki told financialobserver.

“When you search for ETFs online, it’s a bit of a maze, so it’s good to have them all in one spot.

“The ETF growth in Australia has been phenomenal, but a few years ago it probably wasn’t as necessary because there was only a couple billion in ETFs, so as they become more widely adopted, there’s more of a need for some sort of comparison tool.”

In addition, he said it was still difficult for advisers to directly compare ETFs as product issuers were biased toward their own product and therefore did not compare themselves to competitors.

“There are a few research houses out there, but I wouldn’t assume all advisers have access to all research because it’s charged,” he said.

“In terms of freely accessible information, that’s probably something that’s been missing in the market.”

Stockspot has developed ‘spot measures’ to evaluate and compare ETFs across the five common characteristics of fees, liquidity, slippage, tracking and the securities lending policy.

ETFs can qualify for up to five ‘spots’ based on the criteria.

Brycki revealed only one ETF was awarded five spots, while nine ETFs received four spots and seven achieved three.

Three ETFs were given two spots and two ETF were awarded one.

“ETFs are a unique product and there are different factors that lead to an ETF being, in our opinion, investible or having the attributes that make for a good ETF,” Brycki said.

“It’s more of a quant-style measurement because we wanted to be as objective as possible.

“The product that received one spot doesn’t mean it’s a bad ETF, as you can see from their performance that a lot of them have gone up 30 per cent to 40 per cent in the last year.”

He said as management fees reduced and liquidity improved, he expected more ETFs to be given five and four spots.

Stockspot will officially launch its ETF indices on its website before the end of the week.

Earlier this month, Stockspot told financialobserver it was preparing to release model portfolios based on ETFs for retail investors and self-managed superannuation funds.

“We have our indices already and we’ve been tracking them since the start of the financial year,” Brycki said.

“We’re just putting them up on the website at the moment.

“Having a look at the types of people that have registered their interest, there seems to be a lot of advisers and I thought there’d be more beginner investors, but surprisingly there’s been a lot of intermediate to sophisticated investors also showing interest.”

« Back to Articles