Investors prefer ETFs to index funds, according to annual survey
European investors are preferring ETFs to index funds, trading them in a more sophisticated manner and demanding more risky new products, according to the Edhec-Risk Institute’s annual survey of the market.
Edhec-Risk found the ETF market had become more mature, with investors deploying them instead of index funds, trading them over the counter and using them to borrow securities.
However, the institute found ETFs could still grow in risky and alternative product areas and could be used more frequently in tactical asset allocation, as opposed to “static” strategies. In particular, more than half of investors would like to see further development of emerging market ETFs. (article continues below)
Equity, government bond and infrastructure ETFs have already received an approval rating of roughly 90%, the institute says, with 66% approval ratings for other products. On average, ETFs represent 20% of investments in each asset class.
“Dissatisfaction with corporate bond, real estate, and hedge fund ETFs, reported after the financial crisis and evident in last year’s survey, is much less in evidence,” the institute says.
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