Advisers are becoming increasingly sophisticated in their use of exchange traded funds (ETFs) and are taking advantage of a broader range of asset classes than ever before.

The findings come from research conducted by iShares, which discovered that advisers are developing their understanding and usage of the products in preparation for a post Retail Distribution Review (RDR) world.

A survey conducted by BlackRock’s ETF platform showed that 60 per cent of advisers use ETFs as a way of gaining exposure to international, domestic and equity markets, although ETFs are increasingly being used to access fixed income and commodities (32 per cent).

Seventy-six per cent of advisers surveyed are using ETFs for strategic asset allocation or as a core element of their market exposure, and 24 per cent use them tactically to gain quick access to different markets. Only eight per cent use ETFs to provide leveraged exposure to markets, for short positions or to track alternative asset classes.

“The survey findings show advisers are branching out from the traditional equity usage of ETFs into a broader variety of asset classes such as fixed income and commodities,” commented David Gardner, head of Northern Europe for iShares. “This indicates they are now more familiar with the usage and implementation of ETFs, whether as a tactical tool or, as is increasingly evident, as a core part of their investment strategy.”

The last 18 months have seen a plethora of products introduced to the market, which Gardner said encourages advisers to explore subsectors that they may not have considered. “These survey results are evidence that IFAs are now willing to embrace the diversified exposure that ETFs offer as he industry moves towards a post RDR distribution model.”

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