ETFs Gaining Traction with European Investors

ETF Trends

We have witnessed the phenomenal growth of U.S.-listed exchange traded funds as the industry gathers over $1.4 trillion in assets under management. The growth story, though, is not limited to the U.S. markets.

According to the Edhec-Risk Institute, 67% of European investors expect to increase their usage of ETFs while only 4% expect to decrease their ETF exposure, reports Chris Flood for the Financial Times. Europeans are also branching out of straight equities exposure and into other asset classes, such as commodities, corporate bonds, real estate and infrastructure. [Online Broker Sees Demand for Alternative ETFs]

Additionally, the institute also found that European investors are favoring ETF investments more than competing financial instruments like futures, index funds and total return swaps. [Why Generation Y Likes ETFs]

For instance, only 28% of survey participants expected to increase usage of futures, compared to 9% indicating a decline in usage. Around 11% said they will increase usage of total return swaps, a derivative instrument traded on bilateral over-the-counter deals, while 30% expect to lessen their exposure. Lastly, 26% said they will increase exposure to index funds and 24% want to diminish usage.

At a conference earlier this week, professor Nikolaos Tessaromatis, suggested that growing interest for ETFs and futures is attributed to the greater liquidity, transparency and cost of the investment tools.

“Respondents are scrutinizing costs more strongly within ETFs, even though they are already a comparatively low-cost vehicle,” professor Tessaromatis said.

For more information on the ETF industry, visit our current affairs category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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