No plan to cut out advisers: SPDR chair

State Street's global chair for its ETF business says it will continue to be anchored to adviser-led distribution in Australia and not seek to launch a direct-to-consumer push.

Visiting Australia last week, SPDR Global chair Jim Ross said it was initially attracted to Australia because of its strong wealth market, referring to adviser-led distribution.

"We are not going to the market with direct to consumer...they [end investors] obviously do use our ETFs in the US quite often and I am sure they can do the same access here," Ross told Financial Standard.

This is in contrast to Vanguard which last week said it was updating its direct-to-investor portal and separately, entering superannuation.

State Street has been in Australia for close to two decades now and launched the first ETF which, until recently, was the largest ETF in the country.

During this time, Ross said, the rates of adoption for ETFs in Australia are on par with the rest of the world, expect in institutional usage.

"I think the US business has slightly higher market share with institutional investors than we have in Australia but I think that might be because the institutions around the globe tend to go to the most liquid products... because institutions can buy cross border very easily than retail which has to stay in home market," he said.

State Street has active ETFs listed in the US, but they are fully transparent, unlike some Australian active ETFs which are currently facing ASIC scrutiny.

"We'll explore it but we will start with can we do this in a transparent manner," Ross said.

"If they answer is no, we are going to push on away because we believe being transparent with the portfolio is a benefit to the end investor that knowing what is going on in the portfolio is a real benefit."

Ross said SPDR portfolio managers haven't had issues in disclosing their full portfolio on the exchange everyday.

"The managers that we have been working with in active ETFs have no concerns about that. The view is, in fixed income, they can know what my portfolio is but the trading strategy [they can't replicate]," he said.

"I guess if we were to go to a situation where the manager is uncomfortable...we would then evaluate any available structure in the marketplace."

Read more: SPDRFinancial StandardJim RossVanguard
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