2. Single Factor funds. These ETFs are well positioned to gain further traction as fund providers tilt exposures by selecting securities based on specific characteristics or fundamentals such as size, value or quality, or by seeking to mitigate currency risk A couple of examples include the newly launched iShares MSCI International Developed Quality Factor ETF (IQLT) and the iShares MSCI International Developed Momentum Factor ETF (IMTM).
The second area of focus will be on where investors can look for yield. Global fixed income ETFs saw record flows of $84.5 billion last year, an increase of 24% over 2013[3]. While the demand for fixed income ETFs may soften if U.S. interest rates rise as expected, bonds play an important, and continual, role in long-term portfolios. Individuals, financial advisors, banks and insurance companies have increasingly adopted this strategy. We expect to see this pace to continue throughout 2015.
Last will be navigating the currency fluctuations as this will be a key theme this year if the U.S. dollar continues to strengthen against the yen and euro, as expected. Specifically, these funds offer investors exposure to key markets while seeking to reduce the risk of a drag on returns if the local currency depreciates.
It’s impossible to predict whether 2015 will be another record year for ETFs. But with strategies specially designed to help investors of all sizes navigate today’s volatile and divergent markets, I won’t be surprised if more investors see how versatile they really are.
Amy Belew is a Managing Director and head of Global Business Intelligence for Global iShares. She writes about ETF trends for The Blog, and you can read more of her posts here.