Glenn Freeman: I'm here at the Morningstar Investment Conference 2018 with Alex Vynokur from BetaShares. Now, you were talking on stage there about the role of active ETFs and it's not something that you are particularly focused on. Can you just talk us through how you touch on that within your offering?

Alex Vynokur: Sure. Look, first of all, I'd say, Glenn that we are certainly a believer at BetaShares that there's space under the sun for both passive investing and active investing. The vast majority of our clients adopt some sort of indexing or passive investing together with active.

The great thing about exchange-traded funds is that they allow investors to access more efficiently variety of exposures. And active is definitely here to stay and I think active ETFs are actually offering investors an ability to lower the cost of accessing active compared to traditional means which is to either buy it on the platform which might be sometimes expensive or inconvenient means, which is involving filling out the paper, PDFs, application form.

At BetaShares, we are not an actively-managed business. We are not an active manager. Our model with active ETFs is to partner with high-caliber active managers to bring active ETFs to market. Most recently, we have launched some active ETFs in partnership with Legg Mason and prior to that we've launched some active ETFs with AMP Capital.

Freeman: And also, is there something of an evolution in the way that ETFs are being used within portfolio construction by individual investors? You were talking fixed income, for instance, is one area.

Vynokur: Absolutely, Glenn. Look, the one thing we've seen with exchange-traded funds at the moment is that the usage and the way people are using ETFs has evolved quite significantly. Previously, ETFs were all about buy and hold investing and very much around sort of basic portfolio construction. What we are seeing at the moment is that ETFs firstly are used more tactically and secondly, used quite specifically to manage risk in the portfolios.

If I can give an illustration with fixed income which you mentioned, a significant number of investors that we are speaking to at the moment are concerned about the fact that we are in an era of rising interest rates. Traditionally, a fixed income investor with duration exposure in the portfolio would be quite concerned about that and the only way for them to address that traditionally would be to sell out of fixed income. Now, what we've seen with the ETF market is ETFs which allow investors to obtain floating rate bond exposure. So, fixed income is certainly an area that we see a lot of growth in.

One of the other reasons why fixed income is becoming so popular is that it's a lot harder for investors to access individual bonds. They tend to trade in very high denominations, at least 0.5 million or more. And when you are thinking about constructing a diversified portfolio of fixed income securities, it's really only possible for institutional or very wealthy individual investors. So, what fixed income ETFs are doing is really democratizing the asset class for the advisors in Australia and for the self-directed SMSF investors.