An executive at State Street Global Advisors, the manager behind the SPDR exchange traded funds, believes ETFs are gaining greater acceptance among European asset managers despite increased regulatory scrutiny.

Scott Ebner, global head of ETF product development at SPDR ETFs, said ETF usage is “deepening and broadening” as asset managers gain exposure to the various segments of the global financial markets, reports Chris Flood for the Financial Times.

Ebner also highlighted ETFs still saw robust inflows while traditional mutual funds have been bleeding out.

Europe has been focused on the dangers of “synthetic” ETFs, or derivatives-based funds, especially after the UBS scandal and increased concerns over leveraged ETF products during the summer. [A Closer Look at the UBS Rogue Trader and ETFs]

Nevertheless, some areas of the financial markets are not easily accessible through “physical” or passive indexing replication. In such cases, derivatives are the only option, but investors need to be aware of the potential counterparty risks, Ebner noted. [European Regulators Impose Strict ETF Rules]

The greater regulatory focus on synthetic ETFs has brought the issue of counterparty risk to the attention of many investors, Jose Garcia Zarate, an ETF analyst at Morningstar, said. According to a recent Morningstar Survey, 90% of British respondents say they prefer physical ETFs over synthetics. [Synthetic ETFs See Outflows in Europe]

For more information on ETFs, visit our ETF 101 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.