ETFs pioneer Graham Tuckwell plans to seed more ETF products

Graham Tuckwell says he will look to seed more ETF products from the $600m windfall his ETF Securities made last year.

Graham Tuckwell says he wants to generae a ‘sensible debate’ about ETFs. Picture: Ray Strange.

Rich-lister and exchange traded funds pioneer Graham Tuckwell says he will look to seed more ETF products from the $600m windfall his ETF Securities made from selling its offshore businesses last year as the world enters a “scary place” due to geopolitical insecurity and sharemarket volatility.

Speaking ahead of his address to the inaugural ETF’s Down Under conference in Sydney today as he returns to live in Australia after a decade in Europe, Mr Tuckwell said he wanted to generate a “sensible debate” about the role of ETF’s in lowering the cost of investing in equities and other asset classes.

“Technology has shown the entire financial services industry to be incredibly inefficient.

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“ETFs are simply a way of delivering investments exposures to people in a cheap way. Technology should be adopted and costs brought down,’’ he said.

“Because with the environment we are going into, the returns we have seen in the past are not going to be seen in the future.”

Mr Tuckwell said he was concerned about the state of the world, especially the 30-year bull market in bonds caused by falling interest rates, deepening the risks of rising rates and falling bond prices in the future.

“Negative interest rates in Germany, in Switzerland, it is scary stuff,’’ he said.

Early last month the ASX-listed gold ETF started by Mr Tuckwell passed through the billion-dollar mark as investors sought safety from market volatility.

According to ASX data, more money flowed into gold ETFs than any other investment product in July and August this year.

“The answer always is uncertainty,’’ Mr Tuckwell said of the trend. “There is enough uncertainty around the world. There is crap going on politically that makes people feel uncomfortable. China and the US, Hong Kong.

“Gold often sleeps for years and years at a time and, before anybody knows, it increases in value by 50 per cent.”

Magellan chief executive Brett Cairns, Future Fund chair Peter Costello and Australian Super chief executive Ian Silk will appear at today’s forum, which Mr Tuckwell hoped would be a precursor to an annual ETF conference each year in Australia.

“All of my experience overseas suggests in Australia the penny hasn’t dropped. There are almost $3 trillion in assets in super funds. Where do you invest this without everyone putting their noses in the trough?” he asked.

After launching the first ETF gold fund on the ASX in 2003, Mr Tuckwell later expanded the concept to stock exchanges across the world. He is the founder of ETF Securities, which last year sold its commodities business that had $18bn in listed vehicles tracking the prices of gold, platinum, silver and palladium. It also sold its American and European ETF businesses, delivering him a cash war chest of $600m.

Earlier this year Mr Tuckwell revealed he had used $100m of the proceeds to seed a new ETF to be launched by online broker SelfWealth, to be known as the SMSF Leaders ETF.

The ETF is modelled on the stock picks of the nation’s top 10 performing self-managed super funds using data supplied by SMSF administrator BGL.

“I am now trying to invest in companies supplying services to the ETF space. But my base case comes back to a series of ETFs. I don’t want to go into property investment. I am a financial markets guy,’’ Mr Tuckwell said.

He will also continue to focus on philanthropy after providing $100m over the past five years for halls of residence and scholarships at the Australian National University in Canberra.

He said he had no interest in leaving vast amounts of his wealth to his children. “We have told our kids, we will give them an education, help them buy a house and look after them health-wise and that is it. I don’t feel guilty about that at. You need to bring kids up with a bit of bloody discipline. You don’t let them sleep in every day, play video games and eat junk food,’’ he said.

“The best thing for the kids is to do things in their own right. We love the kids and we will help them buy a house, that is important. Everything beyond that they have to do for themselves.

“I also don’t have a business to pass on. I don’t have a manufacturing business out the back of Campbelltown. It is pretty bloody hard to pass on an ETF business.”