ETFs 'cheaper for firms'

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ETFs 'cheaper for firms'

Thu 29th Sep 2011

Exchange Traded Funds (ETFs) are cheaper for businesses to run than more traditional pensions packages and this is why many firms have shifted their portfolios in this direction, it has been claimed.

Alan Miller, founding partner and chief investment officer of SCM Private, told listeners to the FT Money Show that ETFs are cheaper than active funds, with annual charges of around 0.4 per cent compared to typical levels of 1.6 per cent or more.

He commented: "[With] ETFs you can see all the fees unlike many mutual funds where all the fund expenses are hidden and lots of performance fees are hidden."

Meanwhile, Martin Palmer, head of corporate benefits marketing at Friends Life, advised firms ahead of the introduction of the pension auto-enrolment scheme in October 2012 as set out in the 2011 Pensions Bill.

He added that it is "an exciting time" for employers to engage with their staff and to encourage a positive savings culture.

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