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IFAs attracted by innovative ETFs

Marlborough Fund Managers expects IFA demand for its fund of exchange traded funds range to increase as ETFs become more sophisticated.

The company recently took over distribution of the funds from the fund manager i-Funds. Marlborough previously acted solely as administrator to the funds but it is now marketing them under its own brand while i-Funds focuses on the investment management.

Marlborough says IFAs are showing interest in the Marlborough ETF commodity, ETF absolute return, ETF global growth and ETF global income funds as they provide instant access to professionally managed portfolios of ETFs.

The funds, which are available through Cofunds, Transact and Hargreaves Lansdown Vantage, have built up a track record over the past two to three years which Marlborough says is helpful as they are a relatively new concept for the IFA market.

Investors usually have to go through a stockbroker to access individual ETFs and it may be difficult for them to decide on asset allocation and when to buy or sell. Marlborough says wrapping them up into an Oeic makes ETFs easier to access and practical for clients and advisers, who can leave investment decisions to the fund managers.

There is also more choice and innovation in the ETF market, with recent developments such as short and leveraged ETFs, particularly in relation to commodities. Marlborough believes that investors and their advisers may prefer to access this greater level of sophistication through a fund, as a professional fund manager is likely to be able to use these tools more effectively.

Sales and marketing director Keith Ounsworth says: “There is definitely more choice in the ETF market. They are also getting more sophisticated, effectively allowing investors to go short by buying the inverse of indices. If investors are convinced the market will fall, they can benefit from that fall.”

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