ETC demand trumps ETFs for high-net worths clients, says Hargreaves Lansdown

At a recent Money Marketing ETF roundtable, investment manager Ben Yearsley said young high net worth clients were buying more ETCs rather than traditional index-linked ETFs for a more exciting investment.

He said: “In the pure private client space it is the commodities that have driven the market. The large and younger clients want the exciting stuff where they can see volatility and things moving quickly and frequently, they’re not bothered about buying the FTSE 100 or S&P 500 as there’s no gamble with that.

“It may be different in the IFA market but in the private client space it’s interest in the ETCs.”

Barclays Global Investors global head of ETF research & implementation strategy Deborah Fuhr said early ETF adopters have been the ultra-high net worth segment of the market who embraced them for emerging markets exposure.

She said: “It tended not to be FTSE 100 or S&P 500 that we saw embraced first.

But if you think about the IFA, the reality of asset allocation models is it’s not going to be 100 per cent emerging markets or commodities. I think IFAs need to look at a more balanced approach to investing.”

Seven Investment Management director Justin Urquhart Stewart said: “It’s different for us as we are using ETFs for a whole range of different things including the dull stuff which is perfectly sensible.”