Exchange traded fund providers offer products linked to the major indices, but investors seem to want more. Specifically, a growing class of investors is looking for more specialized strategies based on newer indices.
According to a Edhec-Risk Institute 2011 European ETF survey of 174 institutional investment and private wealth managers, 39% of surveyed respondents want ETFs based on new indices, up from 29% last year, reports Chris Flood for the Financial Times. [How ETFs Have Evolved]
While 77% of respondents say ETFs should remain as traditional beta producing investments, 39% of those surveyed believe ETFs can expand into niche markets. [What is an ETF? — Part 3: Enhanced Indexing]
However, actively managed ETFs remain a low priority.
“Actively managed ETFs are not important to our respondents – only 11% think that ETFs should shift from passive to active,” according to the report.
Emerging market equity ETFs remain in huge demand, with 47% of respondents asking for new product development in this asset category, but the number has tapered off from 52% in the 2010 survey.
Additionally, 38% of those surveyed want more emerging market bond ETFs, up slightly from 37% from 2010. Edhec argues that investors are seeking emerging market debt in an attempt to steer away from sovereign debt problems in developed economies.
The survey also revealed that around 63% of the managers state that they plan to increase ETF usage, 25% will increase exposure to futures, 12% will utilize more total return swaps and 22% will allocate more to index-related funds. [More ETF Providers Managing Indices]
For more information on ETF Indices, visit our indexing category.
Max Chen contributed to this article.