AJ Bell comments on IA’s ETF proposal


Ryan Hughes, head of active portfolios at IFA platform provider AJ Bell, comments on the Investment Association’s consultation on the inclusion of ETFs into sectors… 

ETFs are an investment structure, they are not a way of investing and therefore if you’re adding ETFs why are you not adding investment trusts? 

If what you’re doing is saying let’s have one sector for all funds, then it should include ETFs, funds and investment trusts, and surely that’s what they are saying here. If the IA are doing this for the sake of adding a load of passive funds to sectors then that just adds more confusion for investors.

The inclusion of passive funds will mean that where you have got lots of passive funds in a sector, they will occupy the bottom of the second quartile and the top of the third quartile, and active funds will sit above and below that – and that feels like a move that will create confusion for investors.

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