When institutions want to access markets, specifically niche areas with targeted exposures, ETFs often come in as the investment vehicle of choice for difficult-to-reach asset classes.
Moreover, institutional investors may have some qualms with ETFs fees, which may appear more expensive than other index funds, like collective investment trusts. Still, the total cost of trading in ETFs may be lower when factoring in stamp taxes for international funds, securities lending and access to inefficient asset classes, such as emerging markets and small-caps.
According to a recent Greenwhich Associates study, 40% of surveyed institutions plan on increasing their ETF allocations in the next twelve months.
For more information on the ETF industry, visit our current affairs category.
Max Chen contributed to this article.
