Increase in sector investing and sector ETFs amongst UK wealth managers
02 May 2018 London
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Over half (53 percent) of the 50 UK wealth managers survey revealed they use sector exchange-traded fund (ETF) investment strategies, according to SPDR ETF.
According to the research, one in five said they are using them more today than they were 12 months ago, while 44 percent are expecting sector ETFs to be used more over the next 12 months.
When choosing a sector ETF, 40 percent of the wealth managers said liquidity is the most important selection criterion.
Additionally, 31 percent cited the financial strength of the provider as the most pivotal factor. This was with an equal quantity stating that the total expense ratio of the ETF is the key consideration, and six percent described the longevity of the ETF as the ‘most important’ input in their buying decision.
Wealth managers named healthcare as the most attractive sector, selected by 47 percent of investors. Followed by technology at 43 percent, while energy and utilities both scored 35 percent.
Further research showed that two in five, 41 percent, wealth managers using sector investment strategies do so because discrete sector exposures offer a wider dispersion of returns, as opposed to other investment styles.
Claire Perryman, UK head of SPDR ETF at State Street Global Advisors, said: “The Trump election was a watershed moment for European investor attitude to sector ETF investing. The market quickly identified potential winners and losers emerging from the changing political landscape, and assets flowed into ETFs accordingly. At that time healthcare, infrastructure and financials were the standout sector investment opportunities.”
Perryman added: "Today, the sector winners and losers have changed but the dispersion opportunity remains. Since November 2016, we have seen a 47 percent (as of 31 March) increase in assets in sector UCITS ETFs compared to a 30 percent (as of 31 March) growth in the overall ETF market. As wealth managers seek to build targeted exposures with less concentration risk than single stocks, we expect this trend to continue throughout 2018 and beyond.”
According to the research, one in five said they are using them more today than they were 12 months ago, while 44 percent are expecting sector ETFs to be used more over the next 12 months.
When choosing a sector ETF, 40 percent of the wealth managers said liquidity is the most important selection criterion.
Additionally, 31 percent cited the financial strength of the provider as the most pivotal factor. This was with an equal quantity stating that the total expense ratio of the ETF is the key consideration, and six percent described the longevity of the ETF as the ‘most important’ input in their buying decision.
Wealth managers named healthcare as the most attractive sector, selected by 47 percent of investors. Followed by technology at 43 percent, while energy and utilities both scored 35 percent.
Further research showed that two in five, 41 percent, wealth managers using sector investment strategies do so because discrete sector exposures offer a wider dispersion of returns, as opposed to other investment styles.
Claire Perryman, UK head of SPDR ETF at State Street Global Advisors, said: “The Trump election was a watershed moment for European investor attitude to sector ETF investing. The market quickly identified potential winners and losers emerging from the changing political landscape, and assets flowed into ETFs accordingly. At that time healthcare, infrastructure and financials were the standout sector investment opportunities.”
Perryman added: "Today, the sector winners and losers have changed but the dispersion opportunity remains. Since November 2016, we have seen a 47 percent (as of 31 March) increase in assets in sector UCITS ETFs compared to a 30 percent (as of 31 March) growth in the overall ETF market. As wealth managers seek to build targeted exposures with less concentration risk than single stocks, we expect this trend to continue throughout 2018 and beyond.”
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