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Advice critical for ETF investment, say experts

Advice is critical when investing in exchange traded funds, according to industry experts.

Speaking at a recent Money Marketing ETF roundtable, Spencer-Churchill Miller Private partner Alan Miller said investors need an expert to look under the bonnet of ETFs to ensure they know what they are getting.

He said: “You have to look at the index the ETF is tracking and what it is made up of. It needs an expert, whether it’s the IFA or fund manager to look behind what you’re investing in.”

City Asset Management investment director David Wilcox said: “In the IFA industry, this is about being a client facing, structural tax and wrapper adviser and outsourcing the investment management to a third party. The use of ETFs within those third parties is probably going to grow because there are a lot of active funds out there that don’t beat passive and that needs to change.”

Barclays Global Investors global head of ETF research & implementation strategy Deborah Fuhr said: “I think many people, even institutional clients are looking for advice. People need to be educated about the products and they do need advice about how to use and wrap them.”

Hargreaves Lansdown investment manager Ben Yearsley said ETFs have just as many problems as active funds. He said: “There are as many risks in both of them and they are both used in exactly the wrong ways, at the wrong times, probably by the same IFAs.”

Skerritt Consultants investment director Andy Merricks said: “It’s the operating environment, you can use a bread knife to make a sandwich or kill someone, it just depends how you use it.”

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