Official Welcome Mike Taylor - PowerPoint Presentation

Official Welcome Mike Taylor Managing Editor, Editorial Director Money Management

Alex Zaika Director, iShares Wealth Advisory Strategist iShares The Panel Matthew McKinnon Director, Intermediary & Institutions VanEck Damien Sherman Head of Exchange Traded Fund Capital Markets Vanguard Shaun Parkin Head of SPDR ETFs, Australia State Street Global Advisors

Alex Zaika Director, iShares Wealth Advisory Strategist iShares

Damien Sherman Head of Exchange Traded Fund Capital Markets Vanguard

Matthew McKinnon Director, Intermediary & Institutions VanEck

Shaun Parkin Head of SPDR ETFs, Australia State Street Global Advisors

Key trend: increased ‘core’ usage to save fee budget for high conviction opportunities FOR WHOLESALE CLIENT USE ONLY – NOT FOR DISTRIBUTION TO RETAIL CLIENTS Core allocation

ETFs continue extraordinary growth Fixed Income and Smart Beta Growing 2013: DM Equities, Smart Beta 2014: US Equities, FI, Jap Eq 2015: Europe, Japan, EAFE 2016 YTD: Fixed Income, Min Vol Global ETP Assets Data are as of September 30, 2016 for all regions. Global ETP flows and assets are sourced from Markit and BlackRock . Flows and assets for the years between 2010 and 2015 are sourced from Bloomberg and BlackRock . Flows and assets for years prior to 2010 are sourced from Strategic Insights Simfund . Asset classifications are assigned by BlackRock based on product definitions from provider websites and product prospectuses. Other static product information is obtained from provider websites, product prospectuses, provider press releases, and provider surveys. FOR WHOLESALE CLIENT USE ONLY – NOT FOR DISTRIBUTION TO RETAIL CLIENTS

The evolution of ETF products Broad Asset Classes Sub-Asset Classes Active Strategies Multi-Asset Solutions Esoteric Investments Q. What is your current view of the Australian ETF market when compared to US and Europe, and how quickly do you see the Australian ETF market adapting to similar strategies/order models ?

Q. What is your current view of the Australian ETF market when compared to US and Europe, and how quickly do you see the Australian ETF market adapting to similar strategies/order models ?

ETF trading strategies Take long position in an ETF; short one constituent of the ETF Use key trading signals to take advantage of cyclical market movements Use sector funds in addition to core investments to potentially enhance overall portfolio performance, provide diversification, or control risk Quickly gain exposure to specific sectors or asset classes; easily “fill the holes” in a portfolio ETFs Gain instant short-term market exposure while refining a longer-term investment view Establish tactical short term overweight/ underweight positions in an effort to outperform the market or reduce risk Maximize diversification benefits with allocations to a variety of asset classes Q. What are your recommendations for someone that is starting to build his portfolio?

Major Index types Market capitalisation weighted Securities are weighted based on the proportionate size/value of the company Examples include: S&P/ASX 200 Accumulation Index, S&P 500, London’s FTSE 100, Japan’s Nikkei 50 Equal weighted Each stock in the index is equally weighted Examples include: MVIS Australia Equal Weight Index, S&P 500 Equal Weight Index Factor based Weight securities based on identifiable components such as book value, return on equity, volatility and dividend yield. Examples include: MSCI World Quality Index, Morningstar Wide MOAT Focus Index Capped weightings Indices designed to address a specific distortion in conventional benchmarks and target an investment outcome such as addressing stock concentration risk, security liquidity or sector exposure Examples include: MVIS Australia A-REITs Index, MVIS Australia Banks Index

ETF Due Diligence Checklist Evaluate the Index / Fund Does the index and/or fund objectives align with a client’s portfolio ? Examine the ETF’s Product Structure Does the fund’s structure help mitigate portfolio risks and promote liquidity ? Consider the Total Cost Does the ETF minimise expenses ? Gauge Liquidity Can you trade when you want to ? Examine the Fund Provider Does the company have a solid reputation in the ETF marketplace?

Source: SSGA . ETF Cost of Ownership Expense Ratio Commission Spread Tracking Error Total Cost of Ownership Q. What is an effective way to introduce the idea of ETF’s to someone who has never heard of them?

Q&A Submit your questions using the Q&A widget