“These features will be important for European institutions as they move to diversify portfolios away from the traditional domestic and government bonds that have made up the bulk of their investments, and as the increasing complexity of their portfolios prompts institutions to outsource assets in search of external expertise and skill sets that are not in abundance in their internal management teams,” according to Greenwich Associates.
European insurers are also using ETFs as a liquid way to access international equities and diversify a portfolio, with 76% of insurers using ETFs for international exposure, compared to 57% to purchase domestic positions.
Lastly, pension funds were the most likely to act as strategic ETF users and also used the products to diversify a portfolio. About 88% of pension funds ETF investors utilized the funds to access international equities or almost three times the those using ETFs for domestic exposure.
European ETF and ETP Asset growth as at end of December 2014.
Source: ETFGI.com
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Max Chen contributed to this article.