Stephen Walters, founder of advisory firm Dexterity, has been a loyal fan of ETFs for years. Not only does he recommend them, but he set about to study all the ETFs on the London Stock Exchange and whittle them down to around 500 suitable instruments for his typical client: a retail investor who is starting to manage their own money, with an appetite for data, education and guidance.
This vision of the future brought about WhichETF.co.uk, a website providing these tools for clients to pick their own funds and run their own money for a monthly fee. Walters plots three dozen indices daily; and against them he charts the 50 day and the 200 day moving averages, which allows investors to focus on smoothed out performance rather than day to day price fluctuations. Whenever any index slips to the 50-day MA or to the 200-day MA, the independent adviser notifies his clients. Every weekend, he also sends subscribers an email with general useful data and articles.
In his own words, Walters said: "Among many motives for the trend are lower cost, distrust of financial experts, the pleasure of autonomy, a sense of creativity, privacy, pride in relating responsibly to money."
Walters is not at risk of being blind-sided by providers; he does his own research. This means he has an open mind when it comes to synthetically replicated ETFs, and does not instantly swear off a fund that veers away from the market cap index.
The ETF focus came about in the spring of 2009, when Walters realised the industry was on the brink of big changes and he needed a 'survival plan.'
But Walters is the first to tell his peers that the road has not been easy. Speaking at our annual Inside ETFs Europe conference in June, he told the audience that this business model of advocating for ETFs has been like 'pushing water uphill,' and has taken more years to develop than he anticipated as most clients would still be comfortable and familiar with traditional active funds.
He said: "[…] my sense of timing was premature. So if you're now considering an ETF service in your own practice, you may feel relieved to arrive in the wings with a little time still to prepare."