IBRAHIM HUSSEIN | from Computershare

What is a share registry and how does it work? Ibrahim Hussein from Computershare explains that a share registry is a company that manages the relationship between a listed company and its investors. They are responsible for any communication and paperwork between the two, as well as any corporate events or actions.

Ibrahim walks us through the process of becoming a shareholder, from buying shares to receiving and managing paperwork.

In this episode, you will learn the following:

1. How ETFs are created and what an issuer is

2. What all the paperwork is when you first buy a share or ETF

3. How ETF providers know if their ETFs are actually fulfilling the needs of investors

ETFs are a type of investment that are traded on the stock market and give exposure to a basket of securities. They are often passively managed, meaning the fund manager is not picking any stock, and they have lower costs.

Ibrahim is currently the Head of Exchange Traded Funds (ETF) services at Computershare Australia, an ASX 50 Company and a world leader in financial administration with operations spanning over 21 countries.

Ibrahim joined Computershare in 2004 is a member of Computershare’s Issuer Services Executive team in Australia. Ibrahim has been involved in the ETF space for the past 15 years and has a strong track record of helping ETF issuers connect with their investors better.

TRANSCRIPT FOLLOWS AFTER THIS BRIEF MESSAGE

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EPISODE TRANSCRIPT

Chloe (1s):
Shares for Beginners.

Ibrahim (4s):
My day to day is dealing with people at the front office of ETFs and trying to find what their problems are so that I can resolve it. And I think data insight is, is a key aspect in that, really, because data doesn't lie.

Phil (25s):
Good day. And welcome back to Shares for beginners. I'm Phil Muscatello. How are ETFs created and what is an issuer? What's all the paperwork you receive when you first buy a share or etf? How do ETF providers know if their ETFs are actually fulfilling the needs of investors? To explain all this and more is Ibrahim Hussein. Good day, Ibrahim.

Ibrahim (45s):
Thanks Phil. Thanks for having

Phil (47s):
Me here. Thanks for coming along early on a Monday morning.

Ibrahim (50s):
Thank you so much. I actually love your work. I've listened to a few of your podcasts, so Oh,

Phil (55s):
Fantastic. Thank

Ibrahim (56s):
You. Still a pleasure being here. Thank you.

Phil (57s):
Ibrahim is the general manager of ETFs at computer Share. He has over 15 years of experience in assisting ETF issuers meet their strategic objectives and build solid relationships with their investors. So tell us about how you became interested in finance in the first place. What were you doing, you know, at a young, what sort of age did you get into it?

Ibrahim (1m 18s):
Okay, I'm not gonna give away my age, but if I have to describe myself, I would describe myself as a front office guy who loves finance. My love of finance goes back at a very young age at school, and what attracted me to the concept of finance is the concept of wealth and valid creation. So that pathway took me to university where I studied economic banking and finance and subsequently I did an MBA in finance and strategic management. When I was at university, my goal was to actually get into investment banking. That's, that's what I wanted to do. But then I got sidetracked into the financial markets, you know, like everyone else.

Ibrahim (2m 1s):
I always thought that shares and share trading was luck of the draw. You pick stocks here and there, you get lucky sometimes, sometimes you get unlucky. Then I realized there's actually art and science in investment and that really is what got me to it. But today, really the aspect that alive I love the most about my, my, my role is dealing with people. I love dealing with people. I love dealing with decision makers in finance. I love dealing with people behind decision makers. I like dealing with people at the cold face and everyone in between. I'm a firm believer of networking. I'm a firm believer that every person that you meet has a potential to add value to your life.

Ibrahim (2m 44s):
Kiss in point yourself, Phil, we have met in, we met in a

Phil (2m 47s):
A party that's at

Ibrahim (2m 48s):
A party, not a party. It was a networking event at ETF network event and here we are having a cup of coffee and talking about

Phil (2m 55s):
ETFs. Yeah, well that dance music was pretty loud. So at that in the background to me. There you go. So did you, when did you first start investing yourself?

Ibrahim (3m 6s):
Look, I what we did

Phil (3m 7s):
At, were you doing it like in that lack of the draw idea go, oh yeah, I'll pick that one and buy that stock. Or

Ibrahim (3m 13s):
At university we, we played the Asx game where they give you fake money and you invest in real stocks. Yeah, I think this game is still still on play today. Yeah,

Phil (3m 23s):
It is.

Ibrahim (3m 25s):
It was part of our assignment. So we were asked to actually invest for a period of three months and use the tools that we were taught at school to do that. So I did that. I didn't really do very well, mainly because of market conditions at the time. It kind of gave me the idea, oh actually let me just try throw a few dollars here and there. Obviously I was a student that didn't have a lot of money. Yeah, spare money to invest in. But then I put a bit of money into the stock market using the tools that I had studied at the time, and then I started seeing the results at the time. So I thought of this is, this is actually beautiful thing. So going back to what I said earlier, the concept of wealth creation and value creation, I started seeing those outcomes, albeit at a kind of micro level.

Ibrahim (4m 11s):
And I thought, okay, this is not bad thing I've got yet, you know, kids under three, kids under seven. And I'm trying to kind of teach them that concept of this early. It is never too early

Phil (4m 21s):
Do they listen,

Ibrahim (4m 23s):
They all they want is pocket money to go and buy lollipop. So at this stage, so

Phil (4m 28s):
You're not sort of saying, okay, you've gotta save some of these

Ibrahim (4m 31s):
Invested,

Phil (4m 32s):
You know,

Ibrahim (4m 32s):
They've got piggybacks banks obviously, and, and they understand the concept of saving. But also I'm trying to teach them the concept of not just saving, but actually making that money work for you.

Phil (4m 43s):
When did be first become aware of ETFs? Because they're quite a new thing in Australia, really relatively new,

Ibrahim (4m 49s):
Relatively, we are lead adopters in Australia compared to other markets. I was involved in 2007 when Barclay's Global Investors introduced their iShares Crosslisted ETFs. I was one of the first crosslisted ETFs in Australia, primarily domiciled in the US and, and secondly listed here in Australia. It was a very new concept and I was lucky enough for the time to be involved in that launch project and that's really was kind of my initiation into the world of all of ETFs. So I've seen the industry evolve over time to where it is now.

Phil (5m 26s):
So you work at computer share now. What is computer share and how does it touch every investor?

Ibrahim (5m 32s):
Oh, great question. Computer share. I've gotta ask you a question. Do you know, you know, actually computer share was one of the first fintechs in Australia.

Phil (5m 42s):
I think Scott May have mentioned,

Ibrahim (5m 45s):
He may have, you know,

Phil (5m 46s):
He might have mentioned something

Ibrahim (5m 47s):
To something about that part. Yeah, so you know, computer share is just an incredible or success story. You know, you know, it started from a very humble beginning, 1978 in Melbourne. Yeah, 1994 we got listed on the ASX and the market capitalization at that point was 36 million Australian dollars as a close of market. Last Friday, the market cap was sitting at around 16.4 billion

Phil (6m 15s):
With a B.

Ibrahim (6m 17s):
Today we have offices in over 21 countries employing about 16,000 people looking after 75 million account holders around the world. What we do in a nutshell, we attract, engage, and manage our client stakeholders. Those stakeholders could be in the listed space as shareholders or outside of that. That's effectively what we do around the world.

Phil (6m 46s):
That's one of the things, one of the main things is being a share registry. So when you first purchase a share or an ETF or anything listed on the stock market, computer share, and a couple of other companies, but we won't talk about them, but computer share is what's known as a share registry. Yeah. What is a share registry and tell us about that.

Ibrahim (7m 3s):
Yeah, so a share registry, as the name implies, it's really involved in managing the share registry for a company. So we would, in the example they've provided for enlisted company, once an investor has bought shares through the broker, the information are passed on to us, right? And then our role from then on is to manage that relationship with that investor and any other change of ownership as investors buy and sell those securities. Once we have the records, then what we do is we would undertake any activity or corporate events on behalf of, of the, of the issuer. So if an issuer say, pays a dividend or issues the reinvestment plan, we would do that on behalf of the issuer, corporate actions, bonus payments, share locations, all those things.

Ibrahim (7m 54s):
We do all that. And any subsequent communication as well, like issuance of statements to investors, will do that on behalf of the issuer. The key kind of aspect in this relationship is that we are the conduit between the companies that are in this example that are listed and the investors.

Phil (8m 12s):
Yeah, because it's very confusing for a new investor. They, as soon as they buy their first listed investment, they're going be getting a number of pieces of paperwork. Yeah. And it's from the share registry, it's from their broker and obviously their chess statements as well. Overall, can you explain that process and why it's not as daunting as it might seem in the first place?

Ibrahim (8m 35s):
Yeah, it's not daunting and it shouldn't. So when you first purchase a share of the broker, there's a process there, which includes your contract note, et cetera. Then your details are registered with the broker, right? Wells have said earlier that the holding information is passed on us more often than not. The information that we need for us, us to manage that account and not passed on to us at that point, which is why computer share then undertakes an onboarding process. This onboarding process can be done electronically if we already have an email address for that investor. But if it's the brand new investor, then unfortunately we have to initially go out via what we call it welcome paper, where in that welcome paper we will ask investors to go to our website and provide information that help us to maintain that relationship.

Ibrahim (9m 25s):
So what we would typically do is ask for an email address, banking details, tax file number, and also for ETFs, we would ask them to certify for FATCA and CRS, which these are tax certifications. So they're foreign tax certifications. And I'll explain. So the Australian government has entered into multilateral agreement with other foreign countries or tax offices to exchange information. So that information requires investors in every country to certify where their tax residency is at. So for ETFs, we would normally ask investors to certify whether they're Australian or not.

Ibrahim (10m 8s):
And that's very important for listeners because if you don't do that, then we would actually pass on that information to the ATO. But if you miss that initial onboarding, we would normally send two other reminders during the year. So don't panic if you've missed any, the initial call to action there. So really the idea is that onboarding process is intended to make sure that dictates the relationship ongoing. So if an investor doesn't provide the email address, then all, all future communications are done via paper.

Phil (10m 39s):
So let's talk about ETFs. What's your definition of an etf? I mean, we've covered this so many times on the podcast, but I always like to hear everyone's little nuanced view of what their definition of an ETF is.

Ibrahim (10m 49s):
Look, ETFs are very simple products, and, and as you know, ETF stands for exchange traded fund. And as the term implies, these are funds that are traded on a, on the stock market. So they have the same characteristics like any other stock. They can be bought and sold through your broker, right? But what they provide that are different to normal stocks is that by buying an etf, single ETF generally speaking, will give you an exposure to a basket of securities, which can be shares, could be commodities, could be fixed income, could be currency, fiat or digital or any other asset plus. The benefit that has for the investor is that it first and foremost, reduce the transaction cost, right?

Ibrahim (11m 35s):
So if you have to go and buy individual stocks, there are transaction costs associated with that brokerage fees etcetra, by buying an ETF that gives an exposure over, you know, a basket of shares takes away most of that cost. And also most of the ETFs depends how the etf, most of the ETFs actually have a very low fees. So the management fees are very low. Like, to give you an example, if you purchase an ETF that has a management fee of 10 basis points, you invest $10,000, you annual fees, $10, right? Pretty low. And, and really the benefits there is also the, the, the diversification benefits from that because using an index ETF as an example, if you look at any particular index, depending what type of the index, you know, the diversification in terms of, of sectors and industries quite wide.

Ibrahim (12m 25s):
And also you have to bear in mind that ETFs, that you should be professional fund managers, right? So they've done the research so you don't have to rely on your own undertaking to invest, you know, on single stocks. So you're mitigating a lot of risk through that diversification as well. So the benefits are pretty diverse. And the other kind of key benefits in ETFs that most people don't know is the liquidity of ETFs. ETFs have multiple layers of liquidity. So a fund manager, an ETF issuer would typically appoint a market maker or market makers multiple. One of the roles among many of the market maker is to provide liquidity. So if you look at a single stock as an example, the liquidity of that particular stock is limited to shares on issue because most companies are closed-ended securities, right?

Ibrahim (13m 15s):
The shares on market are what they are.

Phil (13m 17s):
There's no more, there's no more creator, there's just a certain number.

Ibrahim (13m 20s):
And if the volumes are low, there's no liquidity, it's hard buy and sell, right? With ETFs, they're open-ended. So one of the roles of the market maker, at the end of the trading day, they'll do the netting. If there are more buyers, then there are sellers, then they'll go and create additional inventory. So they'll place an order in. That order will flow through to the lacks of computer share if you are managing that etf. And then computer share will issue those new securities to market within a day or two. The benefit of that to ETF investors is that at any given time, no matter what market conditions are, no matter how low the trading volumes on the screen look like, you'll always be able to buy and sell ETFs.

Phil (14m 1s):
And that's during the day. It's like that isn't it, like when you go to buy or sell an ETF on market, you're going to be getting almost exactly what the asset value of the securities behind it is at that particular moment.

Ibrahim (14m 16s):
Yeah, so the, the ETFs are tracking an index or they're tracking an underlying, not, not just an index, they're trying an underlying, you know, basket of securities, which could be secure or commodities as I said earlier. And the idea for an ETF is for the ETF price to really track the net asset value price of the underlying very closely. And one of the roles that the market makers is to make sure through the spreads that the ETF price is tracking as close as possible to the enough price.

Phil (14m 46s):
It can be confusing for new investors to come into the market because they see there's so many types of ETFs. Yeah. Can you just give us a quick rundown on those?

Ibrahim (14m 54s):
Yeah, look, I think the first point I'd like to make is, is really to your listeners, everyone needs to actually understand their own situation in terms of their, you know, investment objectives and goals and risk profiles and so, and

Phil (15m 8s):
Time horizon as well.

Ibrahim (15m 9s):
So everyone needs to go out, seek their own advice. What I'm going to say by no means qualify as an advice, cause I'm not a qualified advisor. I think we are very lucky in Australia that given we are late adopters of their ETFs, there's quite a lot of choices on the market today. And credit to fund managers who have been very innovative in coming up with products and regulators as well, who have been very keen to actually, you know, facilitate, facilitate the issues of this product. So ETFs, they're different types of ETFs. I think it's important that we talk about them, right? So traditionally ETFs, you know, are associated with passive ETFs, right? So what that means is the ETFs are passively managed by the fund manager, they're not actively managed, right?

Ibrahim (15m 53s):
So they'll be benchmark of an index, right? That index could be, you know,

Phil (15m 59s):
The top 200 stocks,

Ibrahim (16m 0s):
Top 200 based on capital market capitalization, right? Or it could be sector related index, but they're passive. And because they're passive etfs, normally they have lower costs

Phil (16m 13s):
and and passive just means that there's, the fund manager is not saying, oh, this particular stock is gonna do better than another stock.

Ibrahim (16m 21s):
Yeah. They're not picking any stock. And the characteristic of a, the main characteristic of a passive ETF is that the, the ETF is not intended to beat the market. So it's benchmark to the market. So the performance of the ETF should more or less equal the performance of the underlying benchmark that it's, it's tracking, right? So that, that's the main rationale for that. Yep. Activity on the other hand, as the term implies, they actively managed by the fund manager who, as you alluded, pick the underlying stock and the rationale is they intend to outperform the market. So the fees is usually a bit higher there. So that's the kind of fundamental difference between passive and active etf.

Ibrahim (17m 3s):
And then in between you've got, you may have heard about smart beater ETFs or factor ETFs. So these are kind of halfway housed between the two. And they're usually offered by passive fund managers where they will use an index as an example. But instead in terms of just letting the index follow the, the waiting of the market capitalization, what they will do is they will use rules base or factors. So they may just take all the waitings out capital market capitalization and use factors to make sure they kind of rearrange the, the components of the index and the ideas to make sure that it to kind of outperform the, the index, right?

Ibrahim (17m 45s):
Yep. And the benefit you get with that is that it's still managed by passive fund managers. So you get all the benefits of passive managers such as low fees, et cetera. Yeah. And also you've got, you know, thematic ETFs.

Phil (18m 2s):
Yeah, thematic ETFs. I mean they've really become popular, haven't they? And they, they're, they're trying to address particular investment aims and goals of investors, aren't they?

Ibrahim (18m 15s):
The thematic ETFs are appealing to people's conscious. Right. And also it's targeting mega trends or trends that are, so if there is a trend that, you know, issuers think will continue to grow, then you know, they may build an ETF through that theme, but also through beliefs as well. Like we've seen in, especially in the northern hemisphere, there've been a lot of ETFs that are targeted in religious beliefs as well. You know, there's, there's a Catholic Valley ETF as example. We've seen the first Islamic ETF issue in Australia about a month or so ago. And you know,

Phil (18m 48s):
Really I didn't, haven't heard about this. What's that one?

Ibrahim (18m 51s):
Yeah, I think it's is it's the ticker if I'm not wrong. And it's really kind of appeal to the conscious people's beliefs. Yeah. And, and picking, you know, the underlying that aligned with people's beliefs and, you know, seen a lot of ethical, I mean these are kind of in the ethical kind of

Phil (19m 8s):
No, I understand that. I've just haven't heard about religious based ones. Like and you mentioned the Catholic ETFs

Ibrahim (19m 12s):
In the Yeah, so in, in, in the northern hemisphere, there've been quite a few ETFs. The thematic ETFs intend to do that as well. So, you know, looking at trends and technologies, climate change, you know, there's a lot of ESG kind of themed ETFs as well that we, we start to see in the market. So it's, it's the way of the future and it's part of innovation that ETF issuers constantly churn, you know, so, you know, the possibilities for ETFs is, is limitless. And I think kind of to round up your question is, there's an ETF for everyone, right? Right. So if, whether your aim is growth, passive income more, there's, there's an ETF for everybody and you just need to do your homework, seek advice, I think that's a rational thing to do.

Ibrahim (20m 0s):
And yeah,

Phil (20m 2s):
I think it's also important to always consider the different types of ETFs in terms of some ETFs. And you alluded previously to this, some are about income and you can invest in ETFs that are just set up for income purposes only, which is not, that's the debt markets, isn't it? That's, yeah, it's not to do with stock markets. You're gonna be earning income from debt markets.

Ibrahim (20m 25s):
And that's a good point. Cause if you look at ETFs, like, I'll look at the asset classes on offer today, right? So fixed income are relatively new, right? So they came into market, I think it was around 2010, I could be wrong, but, you know, in, in that, in that region. And really the idea was really to give investors access to the debt market. Cuz it's not easy, easy to invest in that market. So through an ETF through your brokers on a stock exchange, you can have access to the fixed income, which then provides passive income component. But I think overall, one of the benefits of ETFs really is it gave Australian investors access to international equity international shares.

Ibrahim (21m 10s):
Cuz really if you think prior to ETFs you wanted to access shares that are listed, say in NASDAQ or New York Stock Exchange or other markets, you really had to get a broker who has access to the scooters and the cost would be very expensive. And at times you're subject to foreign tax, you know, obligations

Phil (21m 30s):
And currency movements

Ibrahim (21m 31s):
And currency movements, et cetera. But by accessing those ETF domestically, it just provide that easily. But what we see from the data that we have is that Australians are still and represented in the domestic, in international equity. There's a lot of domestic buyers in terms of people just tend to invest in, in, in, in home equity or shares that are domiciled here pretty much under exposed to international equity. But opportunities that there, there's quite a lot of ETFS and offer at the moment that provide exposure to international shares. The other thing to bear in mind as well is we are late adopters in Australia, right?

Ibrahim (22m 11s):
Other markets are a lot mature and, and there's lessons to be learned from other markets. So we've got the benefit of looking of hindsight effectively by looking at other markets in the northern hemisphere and see what they've done. And really statistically, if you look at the US things that happened, the US 15 years ago probably are happening today. So if we look at the data in the US and study that, I think it can help us here. And the other thing as well is the, the Canadian market. It's very similar to Australia. So I've been kind of paying a lot of attention to the Canadian market just to look at the trend and the trajectory that the Canadian market has taken is very similar to the trajectory that Australian market is currently going through.

Ibrahim (22m 54s):
So we have an advantage of being a late mover in, in this, in this.

Phil (22m 58s):
Is that, is that so to avoid mistakes or

Ibrahim (23m 1s):
To Yeah, just pitfalls. And also kind of provide you an opportunity for issuers to see how they can market their products better.

Phil (23m 8s):
Streamlining processes. Absolutely. Yeah. Yeah. So tell us about your job.

Ibrahim (23m 14s):
Yeah, so my job,

Phil (23m 15s):
Because this is, this is what we actually started talking about it at that that launch party, we won't so call it party

Ibrahim (23m 22s):
Networking event.

Phil (23m 23s):
Networking event, yeah.

Ibrahim (23m 25s):
Look, my role is obviously our core services is registry services. So we provide all the services that I mentioned earlier, right? We manage the registry of ETF investors, we are the market leaders in that space. So 80% of all ETF investors in the Australian market reside in our books. Our clients fund managers, issuers in our books are the market leaders. So they have the lion share of the market effectively. And we have coverage of all asset classes on issue here in Australia. So we've got a pretty big advantage in that space. So we provide all those shared registry services. So like breathing for us, it just happens.

Ibrahim (24m 5s):
Yeah, we do that really well. But what we've been doing well without kind of tooting my own horn, is that we are trying to take advantage of our market leadership, especially with the data that we have in our database to make sure that we help the industry. And by that I mean the issuers and the investors.

Phil (24m 25s):
So the issuers, are they like the, the vanguards and the be

Ibrahim (24m 28s):
Shares? Product managers?

Phil (24m 28s):
The product? Yeah. They're the ones

Ibrahim (24m 29s):
Issuing the, the fund managers. The fund managers. Maybe I should use fund managers a term there. So if I take one step back and look at the market structures, right? Our market structure here is very unique in a good way, right? So if you look at the other markets in the northern hemisphere, US, Europe, some extent, Asia, the way the registers work or the records on the register in those markets, they're intermediated, right? So on the register, you'd hardly find name on register, there'll be an intermediary. Either brokers is the case in the US they are some direct investment registrations in the us but it's very small proportion of holders. The majority will sit under brokers because

Phil (25m 11s):
We're, we're very unique in Australia, aren't we in terms of the, the structure of how correct equities and shares and ETFs are, are held. Yep.

Ibrahim (25m 19s):
In Europe's custodians and, and, and some, and some of the Asian markets mirror the US market in Australia, as you, as you've rightly pointed out, you actually have a name on register, the end investor sits in the register, the majority of the records. So what does that mean, right? If you're an issuer, that means you know exactly who's investing in your product, right? And who sits in the middle right computer share. So computer share is the conduit between that end investor.

Phil (25m 50s):
And so you've got a large amount of data to share, haven't you? Yeah,

Ibrahim (25m 53s):
As I said, 80% of all the investors sitting now registered. So what we have done, we have just launched to our clients. So it's not a market launch to our clients. We have launched a very powerful ETF data insight tool that really tells them who is investing in terms of investor time. Is that mom and dad retail holder, your listeners, right? Is it a self made superfund? You know, is it an institution? And most importantly, what we're telling our issuers is how are these investors then using your product? Is the asset utilization in line with the conventional wisdom with what you expect them to do?

Ibrahim (26m 43s):
And the other thing that stands out for me is like we've got, you know, all investors in our, in our universe, the average ETF holding, so how many ETFs? Each one hold is about 1.6, right? Once you take out the institution investors, it's one. So the majority of ETF investors only have one. Now mind you, we manage over a hundred ETFs across almost all asset, all asset classes. An issue in Australia, period.

Phil (27m 11s):
Yeah, yeah. But so the average

Ibrahim (27m 14s):
Investor is one ETF

Phil (27m 15s):
Has one etf.

Ibrahim (27m 16s):
Yeah. So

Phil (27m 19s):
Be a good one.

Ibrahim (27m 20s):
There's a lot of conclusions to be made of that. I mean, so there's a lot of potential for issuers to really educate the investors so that investors can actually can take advantage of this product. So we are playing a very critical role here in trying to bridge that gap. Because really if you think about it, we communicate ETF issuers on our investors, sorry, on our about six to seven times a year. So there's an opportunity for us to really kind of be that messenger that passing the information from one to the other to make sure the size of the pie grows. Cause understandably, you know, we want our fund managers, our issuers to grow their book. But in doing that we want the investors to also grow their wealth.

Ibrahim (28m 2s):
So it's a win-win win situation. So that's really kind of what we wanna do. The other segment that is worth mentioning is self-managed superfund. Right? Data doesn't lie, right? So if you look at the self-managed superfund as a segment, there's about a trillion dollars Australian dollars sitting there, right? Today I think the asset management of ETFs is what's about one 129 billion in our books

Phil (28m 29s):
Get it only seems last week it was a hundred billion. We got that magic hundred

Ibrahim (28m 32s):
Billion 50 actually not long ago. Yeah. Yeah. I remember going to an event, a 50 billion event no long ago. Yeah. So that's, that's pretty significant milestone. So if you look at how many, you know, the percentage of self-managed superfund based on assets either ETF in our universe is less than 5%.

Phil (28m 52s):
And

Ibrahim (28m 53s):
If

Phil (28m 53s):
You think so, hang that number is less than 5% of assets.

Ibrahim (28m 57s):
Yeah.

Phil (28m 59s):
Of assets in super self-managed super funds or

Ibrahim (29m 2s):
Less than 5% of ETF assets are from invested in super self-managed superfund to be precise. And to me, when I look at self-managed super funds without being biased, yeah, I think ETFs is tailormade for them, right? Low cost, large exposures, no brainer, right? But the challenge for ETF issuers as it is for retail investors is that it's a very fragmented market. So what can we do then to kind of give issuers the access to this for them to actually deep into that trillion dollars that are sitting there. So there's a fair bit of work to be done, but I think on the bright side, there's a great opportunity I think for ETF issuers to get into that space.

Ibrahim (29m 43s):
And also opportunity for self-managed superfund to kind of get into the ETFs. Cause really there's a lot of choices there. As we mentioned throughout this podcast. It's quite a lot, a lot of choices for them. So I think it was important to, to kind of mention that. And also the other thing that just worth mentioning as well is that the retail investment in has just growed exponentially. You know, and I'm sure you would probably notice that, but it, it's really great and you know, when you look at Europe as an example, we had a head start to Australia at the moment, you know, the retail investment is around 20% in Australia. Depend on the metric you want to use. If you look at the assets or terms of number of holders or mum and dads who have come into the ETFs in the last two years, that is more than double, right?

Ibrahim (30m 32s):
Smaller parcels obviously. So there's been between 1,005 thousand in in investing. But there also, it's because there's been quite a lot of retail investment platforms that have come to market that are assisting you investors in investing

Phil (30m 46s):
In these. Yeah. And so many small brokerages and so forth. Yeah. Are encouraging long-term no-brainer investing by using ETFs as the core of the investment strategies. Yeah.

Ibrahim (30m 55s):
Yeah. So that, that has been really helpful. What, what we see from the data in terms of new holders coming in in is, yeah, it's a bit interesting cause what you see, one of the pitfalls that you see as well is you, an investor will already hold single stock. ETS will jumping into an etf, they will invest in an index ETF, for example, that already holds, the shares already have. Oh right. So all of a sudden they become overweight in those shares and they don't do their due diligence and rebalance their portfolio and that Yeah. That can be a little bit tricky.

Phil (31m 28s):
Yeah. And that's really important. And fortunately there's portfolio tracking tools these days, which will show this. And you know, we've had people from those organizations on this podcast to talk about that. And so just make sure you're not overweight, you know, you're not correlating too much before we were investments. It's very, yeah,

Ibrahim (31m 44s):
Yeah. It's basic stuff. But yeah, it's, yeah, the industry's heading the right direction. So yeah, that's a longwinded way of answering your question, what I do, but day-today, so Yeah. Yeah. I'll, I'll, yeah, as I said at the top of the colleagues, my day-to-day is dealing with people at the front office of ETFS and trying to find what their problems are so that I can resolve it. Yeah. And I think data insight is, is a key aspect in that really, because data doesn't lie.

Phil (32m 19s):
I just also, just before we finish off, I just wanted to, just, one thing that I just wanted to talk about in share registry services and in ETFs, and this is boring, I know, I know people, this is really boring, but I think it's very, it's amazing that at the end of every financial year, your ETF provider will issue a statement showing you exactly the tax implications of what, what your holding means, which you can just give to your accountant. Is it, can you just describe that piece of paper for me? I mean, I'm just giving you an overview, I don't even know what the correct technical term is for that.

Ibrahim (32m 53s):
Yeah, so the, the correct technical statement will be an AMA tax statements, it is just a tax statement. So ETFs pay distributions, so they, for lack of a better term, they're like dividends. I think a lot of listeners will be familiar with dividends. Yeah. They pay distributions, which really is, you know, if you invest in etf, all their income and capital gains from the underlying securities are distributed to, to unit holders, the ETF holders. And at the end of the year, those are kind of calculated and the, and, and, and tax statements is

Phil (33m 31s):
Produced. And some of them have franking credits and some have got international implicate taxation implications. And all of those things are all summarized in this document,

Ibrahim (33m 39s):
Aren't they? Yeah. So the income will have all the components that are in there, whether you're talking about, you know, domestic imputation credits or foreign imputation credits if relevant capital gains and so on. So that information is calculated. And these days, cause we, we actually send that information electronically to the tax office. So if investors are doing their kind of going to the ATO and doing self-service tax return themselves, you know, that information's already fed to the ato so they don't need to actually print a piece of paper and refer to it. Right. Those, you know, statements are mail or emailed to them for, for reference purposes, but they don't really need it because these days everything is sent the electronically.

Ibrahim (34m 23s):
So when investors file the tax return, the ATO already has that,

Phil (34m 28s):
It's already filled and, and there isn't there. Yeah.

Ibrahim (34m 31s):
Yes. And you're doing, if you're doing a pre-fill, as I mentioned, that information is already there. So yeah, it's, it's fairly automated and ATO has done a lot of progress in data matching. So the days of you printing your dividend advisors and filing them and at the end of the year, giving them to your tax accountant are long gone these days.

Phil (34m 50s):
Yeah. I, Abraham, thank you very much for joining me

Ibrahim (34m 53s):
Today. I feel it's been a pleasure talking to you. Thank you.

Phil (34m 55s):
If you found this podcast helpful, please tell a friend, especially if it's someone who needs to start thinking about investing for their future, you'll be helping them and helping me to keep this show on the road

Chloe (35m 6s):
Shares for beginners is for information and educational purposes only. It isn't financial advice and you shouldn't buy or sell any investments based on what you've heard here. Any opinion or commentary is the view of the speaker only not shares for beginners. This podcast doesn't replace professional advice regarding your personal financial needs, circumstances, or current situation.

Phil (35m 25s):
And thank you for listening to my podcast.

Shares for Beginners is for information and educational purposes only. It isn’t financial advice, and you shouldn’t buy or sell any investments based on what you’ve heard here. Any opinion or commentary is the view of the speaker only not Shares for Beginners. This podcast doesn’t replace professional advice regarding your personal financial needs, circumstances or current situation