June 10, 2008 at 6:00 am by Tom Lydon
A recent survey has found that exchange traded funds (ETFs) aren’t being used to their full potential.
Of course, the survey was of more than 110 European institutional investors, but we still wonder if the figures would look similar in the United States. After all, while Europe’s ETF industry is smaller than ours, it’s growing at an even faster clip. As all this growth is taking place, so is the education that goes along with it.
The business school that conducted the study was especially surprised at the low use of style ETFs compared with sector or broad-based funds, says Ruth Sullivan for the Financial Times. Only 19% use them in core portfolios, while 31% and 94% use sector and broad market ETFs, respectively.
They also generally fail to trade options on ETFs, short sell or lend them out.
Since the last survey in 2006, investors have only gotten hungrier for ETFs. The percentage of investors using equity ETFs shot from 45% to 78%, which those using corporate bond ETFs rose from 6% to 40%. Almost 33% use hedge fund and real estate ETFs, up from 10%, and 50% are in commodities, up from 15%.
Tags | Europe, GUR, Real Estate, UNG
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