For those interested in financial advice, the top subjects selected were investment advice and retirement planning.

The 2025 edition of State Street Global Advisors’ Global Retirement Reality Report reveals Australians are significantly more optimistic and confident about their retirement this year, with levels reaching a five-year high, despite ongoing global economic uncertainty and geopolitical challenges.

The finding stems from a global annual survey^[1] of over 4,300 employees across the US, UK, Ireland, Australia and Canada who participate in defined contribution savings plans, such as superannuation in Australia. The report examines workers’ feelings about retirement, their confidence in achieving their goals, the influences or barriers to retirement, and how these perceptions have changed over time.

Among the 606 Australian respondents in this year’s survey, a third (33%) expressed optimism about being financially prepared for retirement by their planned retirement age, a notable increase from 24% in August 2023 and 22% in May 2020.

Australia ranks as one of the most optimistic countries regarding financial preparedness for retirement, sitting just behind the US at 34%. Canadian and UK respondents reported the lowest optimism levels, both at 20%.

The average expected retirement age for Australian respondents is 66, aligning with the US but later than Canada’s average of 64.

The survey also identified the top three factors positively influencing confidence in retirement for Australians: 43% cited having little or no short-term debt, loans and credit card bills, and 43% expressed confidence that their superannuation or retirement plan is invested wisely. 40% noted their financial ability to save for retirement as positively affecting their retirement confidence.

Jonathan Shead, Head of Investments for Australia at State Street Global Advisors, said: “While this year’s survey presents a hopeful picture, with respondents in Australia and globally generally optimistic about their retirement prospects, the impact of inflation and the broader economic environment remain real concerns over the long term. There are still 28% of Australian respondents expecting to partially retire and continue working, while over 10% cannot envision ever being financially secure enough to afford retirement.”

“Australians identified inflation, increased cost of living, and medical expenses as the top three barriers negatively impacting their retirement confidence. Complex interactions between the public and private systems, concern about health insurance costs in an inflationary environment, and uncertainty about out-of-pocket costs are likely all detracting for retirement confidence for Australians. This highlights the tension between personal financial management and global macroeconomic uncertainty,” he said.

“In response, we are observing that a third of Australians have changed their outlook on retirement in the past six months, and many are adjusting their plans – either by delaying full retirement or embracing partial retirement. Additionally, many Australians plan to increase their short-term savings in the next six months, likely due to the market volatility we are seeing,” Shead added.

Males under 45 with higher income are most optimistic about retirement

Age, gender and income appear to influence confidence levels. 42% of male respondents in Australia are optimistic about being financially prepared for retirement, which is significantly higher than the 24% of female respondents. Women were less likely to have investments outside super (40% vs 53%) and were less likely to have a financial adviser (82% of female respondents do not have an adviser vs 76% of male respondents).

Shead added: “The facts about gender and superannuation have been debated in the public square for years. Median balances for women are lower than men across all age groups. Treasury’s long term microsimulation model of retirement incomes and assets suggests women’s balances will continue to lag behind men’s balances, due to both lower participation rates and the gender earnings gap, although these gaps are expected to reduce in the decades ahead.”

The survey also found that respondents with an income of AUD 100,000 or more are more confident that they will be financially prepared for retirement. Younger workers tend to be more optimistic about their retirement prospects compared to those nearing or already in retirement. While this can be partly attributed to the longer time frame until retirement, it is illuminating that optimism significantly declines at age 45.

More than a quarter of Australians have no plan for retirement savings

Over half of surveyed participants in Australia (53%) associate retirement income with a steady, dependable income stream. However, about one in five (19%) still view it as simply a drawdown plan, indicating confusion about how retirement savings translate into dependable income.

On average, Australians believe they will need just over half of their current income to maintain their desired lifestyle. Over 30% plan to continue investing their savings, drawing down over time. About 20% intend to use their retirement savings to purchase an annuity, and 15% plan to do a combination of both.

Shead added: “It is concerning that more than one in four Australian respondents do not have a plan for their retirement savings once retired. There is also a gender gap, with women less likely to have a plan than men (36% of women versus 18% of men). These findings highlight a clear opportunity for education and tools that will help convert savings into security.”

Financial planning has significant impact on retirement confidence

The survey found that confidence levels among Australian respondents who have an advisor were much higher that other respondents. 64% of advised clients expect to be financially prepared for retirement while only 25% unadvised clients have the same expectations. 

For those interested in financial advice, the top subjects selected were investment advice and retirement planning, matching the top priorities in other countries. Debt management was third on the list, with 48% including this as a service of interest – well in excess of any other country in the survey.

“Australians recognise that finances can be complex. And yet, less than 10% of survey respondents have sought financial advice in the past six months. With an aging population and an environment where change and uncertainty remain constant, retirement planning has never been more important. We know that optimism alone will not carry Australians across the finish line. Bridging the confidence gap between aspiration and proper retirement readiness requires collaboration, education, and a renewed focus on evolving superannuation plans. We hope to see more Australians turn their retirement aspirations into reality,” concluded Shead.

————

Notes:
[1] The study, conducted by YouGov between March 20 and April 7, 2025, surveyed 4,371 respondents aged 18+, who are employed full time or part time, and participate in an employer-sponsored savings plan.

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Sinead Schaffer

State Street Global Advisors, the asset management business of State Street Corporation (NYSE: STT), together with Investment Trends, has released a new report revealing the proportion of advisers using managed accounts in Australia has reached a record high of 59%, tripling from 20% a decade ago. A further 16% of advisers have expressed interest in adoption, potentially bringing the total reach to 75% in the coming years.

The 16th SPDR ETFs / Investment Trends Managed Accounts Report (‘the Report’), which surveyed 946 financial advisers across Australia between November 2024 and January 2025, showed that, amidst persistent global economic uncertainty, escalating inflationary pressures, and a rapidly evolving investment landscape, demand for managed accounts continues to be robust.

The Report showed advisers using managed accounts allocate, on average, close to three-fourths (71%) of clients’ total assets into these accounts. Additionally, managed accounts advisers are directing a record 48% of new client inflows to managed accounts, setting a new high—up from 41% in 2024, reflecting the growing prominence of managed accounts as a primary investment structure.

This explains why funds under management (FUM) in managed accounts have surged 23.2% in the 12 months to December 2024 to a record-breaking $232.77 billion^[1] .

State Street Global Advisors’ Vice President and ETF Model Portfolio Strategist, Sinead Schaffer, said: “The growing adoption among the latest cohort of users is primarily driven by the demonstrated value managed accounts bring to both advisers and their clients. While freeing up their time to focus on client engagement is the key benefit of recommending managed accounts, advisers also see using managed accounts as a cost effective way to access professional investment management for their business.

“The research also found that advisers using managed accounts for longer periods reported higher funds under administration (FUA), suggesting that longer-term adopters benefit from more profitable businesses compared to newer users.”

General Performance is the most important factor when selecting a managed account

Ms Schaffer said the top reason for recommending managed accounts to clients is the ability to achieve full asset allocation, with their top selection criteria being performance, fees, ability to achieve full asset allocation, availability on their main investment platform, and reputation of the asset manager.

“Half of the financial advisers chose performance as the most important criteria when selecting a managed account, while availability on the main investment platform has now surpassed fees as the second highest priority,” added Ms Schaffer.

Saving 23.9 hours a week by using managed accounts

This year, the Report again highlighted the time-saving efficiencies of managed accounts with 60% of advisers citing ‘freeing up their time’ as one of the main upsides of using managed accounts. Advisers reported they, or their support staff, save an average 23.9 hours per week as a result of using managed accounts in their practice, up from 22.8 hours a year ago, equivalent to approximately 1,243 hours saved each year.

Investment Trends CEO Eric Blewitt said the time savings allow advisers to focus their efforts on better understanding and supporting client goals.

“Each year more advisers are turning to managed accounts because they allow for a more holistic approach to wealth planning. The ability to tailor portfolios to meet the specific financial and lifestyle goals of clients is one of the leading reasons advisers are choosing to switch to managed accounts.”

“In fact, one in five advisers report being able to offer a more tailored service to clients due to the flexibility these accounts provide. As a result of time saving, 48% of advisers reported redirecting that time to enhance client relationships, while 26% are using it to acquire new clients,” Mr Blewitt added.

Increase efficiency by streamlining the number of managed account models

The Report showed that multi-asset class models are the most widely used, as 68% of advisers recommended the models in the past year. Additionally, the ability to achieve full asset allocation is a key reason advisers recommend managed accounts to their clients.

That said, this year advisers have reduced the number of models they recommend to clients from 18.2 in 2024 to just 12.1 this year.

Ms Schaffer explained: “The due diligence process can be resource intensive, with advisers on average using five tools when conducting their assessment of managed accounts. As a result, both adviser and licensee have reduced this burden and simplified their approach by reducing the number of strategies they recommend.”

SMAs remain the most preferred choice by advisers

The Report showed that 89% of advisers implement managed accounts with separately managed accounts (SMAs) on platform.

Mr Blewitt said: “Among current managed account advisers who use SMAs on platform, 71% of them use off-the-shelf model. However, it is interesting that custom-built SMAs are particularly popular with experienced managed account advisers. They are allocating 57% of new client inflows to these tailored solutions.”

Other key findings:

• Managed account advisers leaned toward growth-oriented (65%) and risk-based (44%) strategies in the past 12 months, but a third remain uncertain which strategies they would use going forward, reflecting macroeconomic uncertainty.
• Separately managed accounts (SMAs) on platform remain the most widely used structure to implement managed accounts. With 89% implementing managed accounts with an SMA on platform.
• 53% noted ETFs are the underlying products in their managed accounts.
• The group of non-users remains substantial at 19%, however they are open to being persuaded by reduction in platform fees and better research.

State Street Global Advisors officially launched its ETF Model Portfolio capability to the Australian market in 2019, through various intermediaries.

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Notes:
[1]  Source: IMAP/Milliman FUM Census, as at 31 December 2024

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Kathleen Gallagher

State Street Global Advisors, the asset management business of State Street Corporation (NYSE: STT), today released the results of its Model Portfolios: Adaptive Solutions for Advisory Growth research, revealing investor awareness and allocation of assets into model portfolios is on the rise in Australia.

Two-thirds (67%) of Australians are aware of model portfolios now, compared with just 47 per cent in 2019. With awareness of models rising, so too is the proportion of investors who have assets in this investment vehicle through their financial advisers. Among those who are aware of models, over half report having assets managed within model portfolios.

Model portfolios are a collection of assets – including ETFs, stocks and bonds – that are continuously managed by investment managers. These portfolios employ a diversified investment approach to achieve a specific balance of return and risk, or to meet a particular portfolio objective. Typically, Australian investors access model portfolios through managed accounts.

State Street Global Advisors’ Head of Model Portfolios EMEA and APAC, Kathleen Gallagher, says: “With more than half of Australian financial advisers now using managed accounts^[1], it’s great to see the benefits are transcending to investors. As many Australians face the cost of living crunch, investors say lower fees is a key benefits of having their assets in model portfolios. Also it is not surprising that that our research found 73 per cent of investors who have assets in models were satisfied with the fees for value of services, while only to 55 per cent of non-model portfolio investors said they felt satisfied with their fee structure. ”

On surveying investors on their views towards working with financial advisers, State Street Global Advisors’ survey found that 74 per cent of Australian investors want more personalised advice from their adviser that covers a comprehensive view of their financial priorities.

This view was reflected among investors when asked what they saw as the key benefits of their adviser having their assets in model portfolios. An equal 87 per cent of Australian investors see their portfolio being monitored more closely than if it was made and managed by their adviser, and getting more of their adviser’s time as the top benefits.

State Street Global Advisors’ Head of Intermediary, Australia, Tim Bradbury, says: “Australians are expecting their advisers to take a more holistic approach to deliver comprehensive, personalised financial advice that includes planning for life goals, accumulation, income, tax efficiency and risk management. Advisers that use managed accounts have reported that they, or their support staff, save on average 22.8 hours per week.¹ Model portfolios empower advisers to optimise their time, allowing them to focus on providing holistic guidance which is the most important to their clients. Advisers are creating additional efficiencies through providing model portfolios to their clients on investment platforms. The powerful combination of this technology coupled with model portfolios is a key evolution in providing investment solutions and advice cost-efficiently.”

Ms. Gallagher concludes: “Model portfolios are transforming the way financial advisers in Australia serve their clients. By leveraging ETFs as building blocks, financial advisers are now offering ready-made solutions that fully optimise portfolio management and compliance work – similar to providing the cake for investors, rather than just the ingredients. This approach not only provides meaningful and efficient investment strategies, but also means financial advisers can spend more time on what matters most – building stronger client relationships.”

The research, based on a survey of 250 Australian who work with a financial adviser and have investable assets of USD500,000 (around AUD782,750), aims to better understand views and expectations around model portfolios.

State Street Global Advisors officially launched its ETF Model Portfolio capability in the Australian market in 2019. Today, it offers six model portfolios across the risk spectrum and target income strategy.

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Notes:
[1] Source: SPDR ETFs / Investment Trends 2024 Managed Accounts Report, March 2024 

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As the creator of the world’s first ETFs^[1], State Street Global Advisors is committed to making investment opportunities more accessible with institutional- quality investments at a competitive price. State Street Global Advisors is the third largest global ETF provider^[2] with approximately US$1.5 trillion in total ETF assets globally^[3], with 17 ETFs available on the Australian Securities Exchange (ASX).

The SPDR^® S&P^®/ASX 200 Fund (STW) was upgraded to a “Highly Recommended” rating by Lonsec, noted strong conviction in the fund’s cost-effective passive exposure to the broader Australian equity market. Lonsec also highlighted the fund’s significant scale at $4.88 billion and high liquidity, along with its long-term record of tracking its underlying index.

The SPDR^® S&P^®/ASX 50 Fund (SFY) was upgraded to a “Recommended” rating due to its competitive fee of 0.2% per annum. This ETF offers investors a cost-effective and liquid means to gain index exposure to the 50 largest stocks by market capitalisation on the ASX.

The SPDR^® S&P^®/ASX 200 Listed Property Fund (SLF) was upgraded to a “Recommended” rating, also due to its fee reduction from 0.4% to 0.16% per annum in July 2024, resulting in its annual fees and cost being the lowest in its peer group, offering an efficient means of passive exposure to listed Australian property securities.

Lonsec assigned a “Recommend” rating to State Street Gold Fund, which was launched in July 2024. Lonsec said that the Fund offers a cost-effective means of gaining exposure to gold prices without requiring investors to hold, trade, or store physical gold bullion. Another strength of the Fund is that its annual fees and cost is priced favourably against its peer group.

State Street Global Advisors Head of Intermediary Business for Australia Tim Bradbury says: “We are pleased to receive such recognition of our funds from Lonsec. Furthermore it is exciting to see increasing numbers of Australian financial advisers using low-cost ETFs as key building blocks in their client portfolios – in line with advisers in other markets around the globe.”

State Street Global Advisors Head of Investments for Australia Jonathan Shead says: “The recognition is a mark of confidence in the capability and track record of our local ETF team. Our Australian-based portfolio managers also leverage the expertise and knowledge of over 70 investment professionals across the globe, with an average of 21 years of experience.”

Investment in Australian exchange traded products (ETPs) surged in 2024 to reach $225 billion in Funds Under Management, representing a nearly 4-fold increase in market size over the last five years^[4].

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Footnotes:
[1] ETFs managed by State Street Global Advisors have the oldest inception dates within the US, Hong Kong, Australia, and Singapore. State Street Global Advisors launched the first ETF in the US on January 22, 1993; launched the first ETF in Hong Kong on November 11, 1999; launched the first ETF in Australia on August 24, 2001; and launched the first ETF in Singapore on April 11, 2002.
[2] Source: Source: Pensions & Investments Research Center, as of December 31, 2023. Updated annually.
[3] Source: Morningstar Direct as of 30 September 2024
[4] Source: ASX, as of October 31, 2024

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Meaghan Victor

State Street Global Advisors, Inc, the asset management business of State Street Corporation (NYSE: STT), has announced a strategic investment in Raiz Invest Limited (ASX: RZI), a leading Australian fintech platform that helps customers grow their wealth by helping them to save and invest. The parties have entered into an equity investment agreement (the “Initial Share Purchase”) as part of a strategic relationship pursuant to which State Street Global Advisors will acquire approximately 5 percent of Raiz’s share capital through a placement.

In addition, the strategic relationship will see State Street Global Advisors’ trusted brand and deep knowledge of markets come together with Raiz’s mobile-first platform, which helps Australian retail investors with micro-investments primarily in exchange-traded funds (ETF) and model portfolios. Leveraging State Street Global Advisors’ international library of resources, insights and trends, Raiz customers will have access to a broader array of financial literacy content and investment education tools.

“We are excited to expand our relationship with Raiz, a proven fintech leader in bringing important tools and educational resources to investors across the region. This strategic investment reinforces our strategy to join forces with wealth firms who share our commitment to help investors globally manage their investments and savings for retirement,” said Yie-Hsin Hung, President and CEO for State Street Global Advisors.

State Street Global Advisors’ SPDR^® S&P/ASX 200 Fund (ASX: STW) is currently the largest single fund holding in the model investment portfolios provided by Raiz to its customers. The asset manager’s SPDR^® MSCI Australia Select High Dividend Yield Fund (ASX: SYI) and SPDR^® S&P^® Global Dividend Fund (ASX: WDIV) are also available on Raiz.

State Street Global Advisors Head of Intermediary Asia Pacific, Meaghan Victor, said deepening the existing relationship with Raiz reinforces State Street Global Advisors’ commitment to the Australian market. “This investment is a natural extension of the successful relationship we have enjoyed with Raiz since launch in 2016. Both of us share a passion for making financial tools and solutions accessible to all investors, and through this strategic arrangement we will leverage our respective capabilities to help Australian investors plan and save for retirement.”

 Raiz Managing Director and CEO, Brendan Malone, said the strategic relationship would see Raiz and State Street Global Advisors work more closely together to create innovative savings and investment insights and education for customers. “From learning about investments in ETFs through to more complex investment strategies such as superannuation retirement portfolios, we look forward to continuing our relationship with State Street Global Advisors on educational tools for all stages of a customer lifecycle.

“Raiz’s Australian customers, who range from beginners to experienced investors, will benefit significantly from the global resources that we can provide through this strategic arrangement. Between Raiz’s technology and State Street Global Advisors’ global investment capabilities and markets expertise, there are great opportunities for innovation in the Raiz product offering.” 

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Anna Paglia

State Street Global Advisors, the asset management business of State Street Corporation (NYSE: STT), today released the results of its 2024 ETF Impact Survey, which found that despite the domestic cost-of-living crisis, Australians are amongst the most optimistic in the world regarding their own financial position.

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Reporting to State Street Global Advisors CEO Yie-Hsin Hung, Ferrarelli will be responsible for delivering world-class technology, systems and operational infrastructure that will support the business across all asset classes, client segments and geographies.

“We are thrilled to welcome James to State Street Global Advisors as our chief operating officer,” said Hung. “I look forward to him joining our leadership team and working with him to implement a strategic vision aimed at building a top-tier operations and technology environment.”

James will join State Street Global Advisors from Charles Schwab where he served as the chief information officer of their wealth and asset management divisions. In that role, he was responsible for technology strategy, application design and development, third-party product integration and production management of the technology platforms supporting the business enterprises within the corporation.

“I am excited to join the dynamic leadership team at State Street Global Advisors as Chief Operating Officer,” said Ferrarelli. “Leveraging my industry experience, I am eager to help boost efficiency, quality and scalability that will position the firm for continued success in the years to come.”

Before working at Schwab, James held senior technology leadership roles at J.P. Morgan Asset Management and at Morgan Stanley Investment Management. Ferrarelli earned a Bachelor of Science in computing information systems from the University of Manchester in the United Kingdom.

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Kathleen Gallagher

State Street Global Advisors, the asset management arm of State Street Corporation (NYSE: STT),has announced the inclusion of the State Street Risk-Based ETF Model Portfolios on the Netwealth Super and Wealth Accelerator.

This expands the availability of the State Street Risk-Based ETF Model Portfolios – Moderate, Balanced and Growth – to Australian financial advisers using the Netwealth platform.

The State Street Risk-Based ETF Model Portfolios, employ an open architecture investment structure, meaning financial advisers, on behalf of their investors, can select a portfolio of ETFs which not only cover a range of sectors and asset classes but also invest in a range of ETFs from multiple product issuers.

Model portfolios are a collection of assets that can be attributed to an investor’s portfolio and continually managed by professional investment managers, where teams of experienced investment professionals can assist advisers to serve existing clients and attract new business more effectively.

State Street Global Advisors officially launched its ETF Model Portfolio capability in the Australian market in 2019. It now ranks among the top 20 most used investment managers by advisers who currently use managed accounts.^[1]

According to the Investment Trends 2024 Managed Accounts Report, the proportion of Australian financial advisers using managed accounts has more than tripled from 18% a decade ago to currently a record high of 56%.^[1]

And a further 19% of advisers are potential users, taking the total possible reach in coming years to potential 75%, making managed accounts the pre-eminent solution for financial advisers.1

As a result, funds under management in managed accounts have surged by 146% in five years to exceed $194.85 billion.^[2]

Further, the State Street Risk-Based ETF Model Portfolios are offered on platforms as separately managed account (SMAs). This remains the most widely used structure to implement managed accounts, with 80% of advisers implementing managed accounts with an SMA on platform.^[1]

“Since launching our ETF model portfolios in 2019, uptake has been strong. Many financial advisers appreciate model portfolios for their time saving, allowing for improved engagement of existing and new clients as well as the appropriate investment structure to implement a core-satellite investment strategy,” said Kathleen Gallagher, State Street Global Advisors’ Head of SPDR ETFs Australia and Head of Model Portfolios EMEA and APAC.

“A key factor that differentiates State Street Risk-Based ETF Model Portfolios from competitors is the inclusion of smart beta in the global allocation, which supports additional capital growth while maintaining traditional risk tolerances.

“In other words, our risk-based portfolios are not your traditional 60/40, or 70/30 allocation – they are skewed towards growth while maintaining the same level of risk as traditional risk profile portfolios.

“In addition, we believe the transparent and open architecture nature of our models, will further support advisers to achieve the desirable outcomes for their clients.

“An open architecture investment structure means that ETFs from a range of providers have been considered to ensure portfolio investment selection is not limited by sector, asset class or product issuer.”

Netwealth is a specialist investment and super platform for financial advisers and wealth professionals designed to help manage their clients’ investment and superannuation portfolios..

Netwealth is used by more than 3,500 financial advisers, with more than $84.7 billion in funds under administration.^[3]

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Notes:
[1] SPDR ETFs / Investment Trends 2024 Managed Accounts Report, March 2024.
[2] Institute of Managed Account Professionals (IMAP) and Milliman, as at 31 December 2023
[3] Netwealth, as at 31 March 2024.

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This reflects the growing appeal of managed accounts for a new generation of financial advisers.

The proportion of advisers using them has more than tripled from 18% a decade ago to an equal record high of 56% now. A further 19% of advisers are potential users, taking the total possible reach in coming years to 75%, making managed accounts the pre-eminent solution for advisers.

This helps explain why Funds Under Management (FUM) in managed accounts have surged 146% in five years to exceed $194.85 billion[1].

The 15th annual SPDR ETFs / Investment Trends Managed Accounts Report found that with ongoing capital markets instability, fanned by economic and geopolitical tensions globally, adoption of managed accounts has become more popular than ever.

State Street Global Advisors’ Vice President and ETF Model Portfolio Strategist, Sinead Schaffer, said the strong and sustained adoption of managed accounts was a reflection of their ability to support advisers’ holistic approach to financial planning.

“Fifty-nine per cent of advisers cite ‘freeing up their time’ as one of the main upsides of using managed accounts with advisers now reporting they, or their support staff, save on average 22.8 hours per week, up from 17.1 hours last year.

For an adviser who works 7.5 hours a day, that’s a saving of three days per week,” Ms Schaffer said.

“This allows them to focus on value added work that increases their customer value proposition to existing and new clients.

“As expected, more advisers are using these structures for lower balance clients, with 40% of existing managed account advisers believing it’s appropriate to hold the majority of assets in a managed account for clients with balances less than $100k, up from 33% the previous year.”

Ms Schaffer said the most popular reasons for recommending managed accounts to clients included performance, fees, availability on their main investment platform, reputation of the asset manager, and asset class exposure: In the past year, advisers have recommended, on a median basis, 19 managed account models from 25 available on their approved product lists (APLs).

With approximately 1,100 options available, it begs the questions why does the APL reflect less than 1% of options available.

Managed account advisers say they allocate close to two thirds (64%) of clients ’ total assets into a managed account, with the most popular (68%) being multi-asset class.

“Separately Managed Accounts (SMAs) continue to be the most widely used structure for implementation (80% cite this). Sixty per cent of these solutions are strategic asset allocation, indicating these are long term investment solutions,” Ms Schaffer said.

“Financial advisers mainly use managed accounts as a core, long-term portfolio allocation solution, dedicating 60% of new client money to core investments, 55% of that core to managed accounts and they plan to keep the investment for an average of 7.8 years.

“Forty-three per cent of current managed account users have used income-focused strategies in the past 12 months and 42% of current managed account users have used risked based strategies in the past 12 months.”

Investment Trends CEO Eric Blewitt said managed accounts had particular appeal for different client segments. “Affluent clients with funds between $250,000 and $1 million are the most popular segment that advisers believe should use managed accounts for the majority of their portfolio,” he said.

“That is followed by clients with balances between $100,000 and $250,000, those with less than $100,000 and finally High Net Worth clients with more than $1 million to invest. “On a generational basis, accumulators aged between 35 and 49 are seen by advisers as the most appropriate for managed accounts, followed by retirees, pre-retirees over 50 and finally millennials under the age of 35.

“Almost a quarter of non-managed account users said a reduction in platform fees would prompt them to start recommending managed accounts to their clients. “More than three quarters of all financial advisers (77%) say they would consider switching their managed accounts to a different platform, in a sign they continue to look for ongoing value in a hyper competitive market.”

Other key findings:

• Managed account advisers have been particularly bullish in their investment options over the last 12 months, adopting growth-oriented investment strategies for their clients more than twice as often as defensive ones (64% versus 24%).

• However, that is likely to shift in 2024, with income-focused strategies emerging as the most popular strategy for almost half of all managed accounts advisers (42%), followed by growth (29%) and ESG-aligned (27%), while defensive and risk-based models continue to fall away (17%).

• Sixty-one per cent of current managed account users rely on research houses to ensure recommendations meet best interest, compared to 45% who evaluate past performance and 35% who rely on investment managers’ recommendations.

The 15th edition of the SPDR ETFs / Investment Trends Managed Accounts Report was conducted by Investment Trends via an online quantitative survey of 1,066 Australian-based financial advisers between November 2023 and January 2024. State Street Global Advisors officially launched its ETF Model Portfolio capability to the Australian market in 2019, through various intermediaries.  According to the report, it now ranks among the top 20 most used investment managers by advisers who currently use managed accounts.

[1] Source: Institute of Managed Account Professionals (IMAP) and Milliman, as at 31 December 2023.

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Marie Tsang

Now is the time for Australian investors to consider putting their cash back to work.

By the end of 2023, Australia’s 80 plus authorised deposit-taking institutions had collectively attracted about $2.9 trillion in deposits^[1].

The big four banks alone have gained $660 billion in deposits since the pandemic^[2].

Against a backdrop of increasing rates over the last two years, that made sense because bank cash has certainly generated solid returns at low risk.

The rush to cash also occurred while bond returns were particularly challenged, although last year saw a partial bond recovery.

However, with the Reserve Bank of Australia expected to consider lowering rates this year, we believe investors may now benefit from putting their bank cash back to work. For this purpose, bond exchange-traded funds (ETFs) might be worth considering.

Let’s look at how the two types of investments compare.

Bank cash and at call deposits

High interest at-call cash investments are, as the name suggests, quite readily accessible.

Term deposits typically require significant notice to withdraw funds and may incur penalties for early withdrawal.

In addition to potential inconveniences around timing, deposit customers are generally price-takers since rates of return are the full discretion of banking and other institutions.

It is an area that caught the attention of the ACCC, which undertook an inquiry in 2023 to review retail deposit products and practices³. Additionally, term deposit rates are locked in for a given period, which cushions investors from falling rates but prevents them from benefiting when rates climb.

From a security perspective, cash deposits with authorised deposit-taking institutions may be protected under the Financial Claims Scheme (up to a dollar limit), but investors can find themselves exposed beyond this.

ETF bonds

In contrast to term deposits, ETFs may be transacted any time during a trading day, thereby providing investors with access and flexibility.

Bond exposures trade in a market that is balanced by buyers and sellers, more accurately and quickly reflecting changes in interest rates and other market conditions.

ETFs are also fully backed by a portfolio of underlying assets safeguarded by a custodian, offering more security.

Finally and importantly, over a long enough horizon, a portfolio of bond assets (particularly when used as a complement to growth exposures in a diversified portfolio) will have a better chance of maintaining its value, while a cash investment’s value can erode over the same time period, particularly if inflation is as high as we have witnessed in recent times.

The opportunity in bonds arises as yields have adjusted higher, with a good chance interest rates are lower by the end of the year⁴. As interest rates fall, bond valuations generally increase, increasing the value of bond ETFs (the reverse is also true).

What are the risks of ETFs?

There is always an element of risk when investing, and you should consider your investment objectives, risk tolerance and investment horizon to ensure your investment choices align.

Analysts may on average predict that bond yields will fall over the course of 2024, but they have predicted cuts before and have been proven wrong.

With the Australian dollar at historical lows, international bond exposures may be at risk of an appreciating AUD, while currency hedging can be costly. For example, hedging USD exposures back to AUD can create a drag on performance.

Nevertheless, this risk may be mitigated by investing in Australian bonds, for which there are plenty of ETF options available.

So there are your options. Is it time you get your cash back to work?

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Notes:
[1] Source: APRA, total residents’ deposits on Australian books of ADIs, as of 31 December 2023.
[2] Source: Bloomberg Finance L.P., based on reported balance sheet data for (CBA, WBC, ANZ and NAB), from 2019 to 2023.
[3] Source: ACCC, “Bank customers missing out on earning more interest from savings”, 15 December 2023.
[4] Source: Bloomberg Finance L.P., bond yield expectations, RBA cash target, 3-month, 2-year and 10-year, actual as well as consensus forecasts for 31 December 2024, as of 26 February 2024.

Important Disclosure: Issued by State Street Global Advisors, Australia Services Limited (AFSL Number 274900, ABN 16 108 671 441). You should seek professional advice and consider the product disclosure statement and target market determination, available at www.ssga.com/au, before deciding whether to acquire or continue to hold units in an ETF.  This material is general information only and does not take into account your individual objectives, financial situation or needs and you should consider whether it is appropriate for you. This material should not be considered a solicitation to buy or sell a security. Investing involves risk including the risk of loss of principal. Diversification does not ensure a profit or guarantee against loss. Frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs. 6442725.1.1.ANZ.RTL  Expiry Date: 28/02/2025

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