Interesting article relating to a recent survey by Greenwich Associates around the continued growth and shifting demand for ETF products. Despite 2018 global inflows being down on the highs of 2017, it was still exceptional year with $315.8bn (vs $467.1bn in 2017).
The scale and market share attributed to ETFs is now simply too big to ignore, and Banks are increasingly developing their own products for its hedging, liquidity purposes as well as low cost efficiencies. This is also echoed by continuing demand from retail investors (85% of according to the survey) who use ETFs as their preferred index wrapper.
The breadth of products available, multi-asset scope and continued evolution of automation and smart-beta index channels can only drive continued demand for this product....
Investors are using exchange-traded funds (ETFs) as tactical tools and strategic, longer-term allocations, so banks are investing heavily to capture this business. Research recently published by Greenwich Associates revealed that allocations to ETFs in Europe increased by 50% in 2018 and now total 15% of total assets among 127 institutional ETF investors surveyed by the research firm. These included 46 institutional funds, 48 asset managers, 14 insurance companies and 19 discretionary wealth managers. Andrew McCollum, managing director at Greenwich Associates, attributes some of this growth to the market volatility at the end of last year. “As institutions repositioned their portfolios to address heightened volatility and risk, they made wide use of ETFs to implement specific modifications. Institutions are utilizing ETFs as both tactical tools and as a strategic, longer-term staple in the portfolio.”