Investors still hungry for ETFs
17 March 2016 London
Image: Shutterstock
Appetite is increasing for exchange-traded funds (ETFs), according to the EDHEC-Risk annual European ETF survey.
The survey found that ETFs are making up an increasing proportion of portfolio holdings across traditional asset classes. In 2015, 91 percent of respondents said they use ETFs to invest in equities, compared to 45 percent in 2006.
In 2015, 82 percent said they use ETFs for investing in commodities, compared to 15 percent in 2006, while ETFs for government and corporate bonds and real estate also saw significant increases.
Six out of seven asset lasses saw an increase in their ETF market share, compared to 2014. Equities, government bonds and infrastructure each saw a 1 percent increase and commodities saw a 3 percent increase, but corporate bonds and real estate saw a 10 and 11 percent increase, respectively. Hedge funds noted a 3 percent decrease in their ETF market share.
Satisfaction rates remained at a high level, increasing from 91 percent in 2014 to 98 percent in 2015. According to the survey report, rates of ETF satisfaction have been around 90 percent since the survey began in 2006.
However, some typically high-scoring asset classes saw slight decreases in their satisfaction rate. Government bonds dipped from 94 percent to 89 percent, while corporate bonds scored 81 percent, compared to 90 percent in 2014.
The survey found that just under 60 percent intend to increase their level of ETF usage, 35 percent plan to maintain their usage, and only 5 percent plan to reduce it.
This was found to be primarily down to cost factors – 80 percent of respondents said they are motivated by costs, compared to 70 percent in 2014. Half of the respondents said they were motivated by performance, while liquidity and transparency were cited as motivation by 45 percent and 46 percent, respectively.
Lionel Martellini, director of EDHEC-Risk Institute, said: “This survey confirms the relevance of ETFs in institutional investors’ asset allocation. Smart beta indices appear to be a key growth area for the ETF industry looking forward, with an ever increasing focus on improved transparency and informational efficiency.”
The survey found that ETFs are making up an increasing proportion of portfolio holdings across traditional asset classes. In 2015, 91 percent of respondents said they use ETFs to invest in equities, compared to 45 percent in 2006.
In 2015, 82 percent said they use ETFs for investing in commodities, compared to 15 percent in 2006, while ETFs for government and corporate bonds and real estate also saw significant increases.
Six out of seven asset lasses saw an increase in their ETF market share, compared to 2014. Equities, government bonds and infrastructure each saw a 1 percent increase and commodities saw a 3 percent increase, but corporate bonds and real estate saw a 10 and 11 percent increase, respectively. Hedge funds noted a 3 percent decrease in their ETF market share.
Satisfaction rates remained at a high level, increasing from 91 percent in 2014 to 98 percent in 2015. According to the survey report, rates of ETF satisfaction have been around 90 percent since the survey began in 2006.
However, some typically high-scoring asset classes saw slight decreases in their satisfaction rate. Government bonds dipped from 94 percent to 89 percent, while corporate bonds scored 81 percent, compared to 90 percent in 2014.
The survey found that just under 60 percent intend to increase their level of ETF usage, 35 percent plan to maintain their usage, and only 5 percent plan to reduce it.
This was found to be primarily down to cost factors – 80 percent of respondents said they are motivated by costs, compared to 70 percent in 2014. Half of the respondents said they were motivated by performance, while liquidity and transparency were cited as motivation by 45 percent and 46 percent, respectively.
Lionel Martellini, director of EDHEC-Risk Institute, said: “This survey confirms the relevance of ETFs in institutional investors’ asset allocation. Smart beta indices appear to be a key growth area for the ETF industry looking forward, with an ever increasing focus on improved transparency and informational efficiency.”
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