With U.S.-listed exchange traded funds crossing over $1.4 trillion in assets under management and global ETF assets hitting $2 trillion, the fund products will attract greater interest among institutional investors and active advisors, according to iShares, the ETF business of BlackRock (NYSE: BLK).
According to iShares, institutional investors will increase their use of ETFs in the coming year, and active manager and advisor ETF investment portfolios will also grow. [Global ETF Assets Cross $2 Trillion Mark]
“Active asset managers will likely continue to use ETFs for asset allocation in an effort to achieve alpha in balanced funds, asset allocation funds, DC [defined contribution]funds and even annuities,” iShares said.
Global asset managers have increased usage of ETFs from $105 billion in the third quarter of 2011 to $125 in the third quarter of 2012. The active managers and hedge funds utilize ETFs, particularly country and sector ETFs along with credit and emerging market debt, in global asset allocation portfolios.
Additionally, iShares points to growth for advisors who provide expertise about ETF portfolio construction and trading to outsourced model portfolios.
Meanwhile, institutional players will utilize ETFs as liquid resources.