iFast to offer alternatives, retail access to ETFs

Online fund platform iFast is expanding its product range to include alternative products, direct retail access to exchange-traded funds and online brokerage, allowing trading of listed stocks and ETFs.   

Will Shum, portfolio manager at iFast in Hong Kong, said the new services – to be offered in Hong Kong and Singapore – would provide more product choice to the retail segmen. He did not specify when they would launch.

iFast is planning to add alternative investment funds to its platform serving financial advisers because of client demand. Currently this platform offers access to mutual funds, bonds and stocks, and ETFs. 

"Since financial advisers have been requesting more funds with alternative strategies for them to achieve diversification and low correlation to traditional investments, we will broaden our fund choices by offering more funds with alternative strategies including hedge fund, physical real estate and such [products]."

Shum said he didn't have a time line for launch, but that the firm regularly reviewed funds and conducted due diligence on them if it wanted to onboard them.

Meanwhile, iFast has provided access to ETFs for the adviser community via the integrated wealth management platform launched in 2013. But it has not, until now, offered direct retail access, except through its discretionary portfolio management platform, where US ETFs are used for tactical allocation.

“As actively managed portfolios tend to adopt aggressive investment strategies, they are likely to have higher volatility during market corrections,” he said. 

ETFs, on the other hand, help avoid active management risk during stagnant or down markets, noted Shum, suggesting that US-listed ETFs could be a better choice at this point.

Shum said it had not looked to set up an ETF platform until recently because of low interest from retail investors in Asia. But ETFs are gaining popularity as regulators in the region support the growth of these products, though they recently hit an obstacle in Asia in the form of know-your-customer rules, as reported last week.

At AsianInvestor’s ETF Summit last week, Deborah Fuhr, managing partner of research house ETFGI, tipped ETFs to become the “dominant fund structure” globally by 2030, when the asset management industry is expected to be worth $110 trillion, as reported.

Asia represents only 4% of global ETF assets and remains largely an institutional market for ETFs, with factor-based strategies the most popular products, said Fuhr. 

But in 15 years’ time retail investors, too, should be using ETFs much more, with the benefit of greater education and understanding of their benefits, panellists argued. Electronic platforms such as iFast and robo-advisers would play a key role in transforming the ETF market, they added.

iFast had assets under administration of S$5.64 billion ($4 billion) as of December 2015, up 5.2% year-on-year from 2014.