ETF usage rising across all asset classes: survey

The use of electronic-traded funds (ETFs) across all asset classes has increased significantly over the past three years, notably within the equity universe where their use has increased from 45 per cent to 95 per cent.

That’s a key finding of a survey by the EDHEC Risk and Asset Management Research Centre of 360 institutional investors and private wealth managers in Europe, conducted between January and February 2009.

It found that ETFs currently make up more than a third of the average respondent’s equity investments (and 22 per cent of commodity investments), making equity the largest ETF investment segment.

It also found that 94 per cent of all participant ETF equity investors in the survey reported that they are satisfied with their investments.

However, ETF usage was found to have experienced its greatest growth within the past year in government bond investments, with 80 per cent of respondents reporting usage up from 40 per cent last year.

Another key survey statistic was that ETFs for broad market coverage are more frequently used than ETFs for specific sub-segments.

Likewise, long-term buy-and-hold investment is reportedly more frequent than short-term (tactical) investment.

Although ETFs are still gaining market share in the alternative asset class, satisfaction with real estate and hedge fund ETFs has fallen in 2009.

Dissatisfaction with hedge fund ETFs has resulted in a fall in usage from 7 per cent to 5 per cent in the share of total hedge fund investment accounted for by ETFs.