Revealed: Top 10 UK Advisers Using ETFs

November 26, 2015

Andrew Merricks

Vanguard S&P 500 UCITSEquity ETFs tracking the FTSE 100 or the S&P 500 tend to be the mainstay among passive fund users. But Andrew Merricks, head of investments at Skerritts Wealth Management, has moved away from plain old vanilla.

His firm creates passive-only, discretionary portfolios for certain clients, and is not afraid to target specific exposures. This includes European banks, an Amundi S&P Global Luxury ETF and a db X-trackers private equity ETF. Spanish banks are the one place where Merricks has not found the right ETF.

"Before, people used investment trusts. And now there are so many more ETFs, there is usually something that caters to what we're looking for," he said.

Similarly, the firm has held on to a db X-trackers health care equities ETF for around four years, proving that sector ETFs are not always short term, tactical plays.

"We hold them as long as the idea is justifiable," he said. "Yes, it is quite a rare approach [to buy and hold these funds] but that's why we like to do it. We don't put our portfolios together by accident; we look for the 'best of.' That's where having access to ETF providers is so helpful. It's about having as many tools in the box as possible."

The funds are reviewed quarterly, but Merricks said the team can move at any time.

"We invested in China A-shares through ETF Securities, and we didn't wait until the end of the quarter before moving when those markets started kicking off," he added.

But are there now too many products?

"Product choice has to be a good thing," said Merricks. "There are far too many basic trackers—that's down to the providers if they want to offer them, and down to investors if they want to use them."

Merricks concluded that it's important not to just use ETFs in the 'bog standard way.' Going short and leveraged, he says, can be useful, and he has recently invested in a short emerging market equity fund.

"We couldn't find anything like that on the active side. You might get absolute returns and long/short strategies, but it's what the active manager wants to provide you, rather than what we want to provide our clients," he said.

 

 

 

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