“Institutional clients are increasingly implementing overlays which include ETFs in order to mirror the risk/return profile of a portion or the entirety of their policy portfolio,” iShares added.
Lastly, iShares believes that fixed-income ETFs will attract a greater following due to rising market volatility and lower bond issuance. Bond ETFs will allow institutions to efficiently access and managed fixed income exposure.
“In 2013, we believe institutions will continue to use devleoped market fixed income ETFs for passive core allocations, tactical strategies, transitions and risk management,” iShares said.
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Max Chen contributed to this article.