Growth, as measured in dollar terms, of ETF holdings comes at a time when more institutional investors are mulling increased use of ETFs and as ETFs are poised to overtake hedged funds in terms of combined assets under management.
A recent survey conducted by Invesco’s (NYSE: IVZ) PowerShares unit, the fourth-largest U.S. ETF issuer, and Market Strategies International, shows that use of smart beta ETFs by professional investors continues climbing.
Sixty-four percent of institutional usage of smart beta ETFs is currently concentrated to dividend funds, a number that is expected to rise to 67% over the next three years, according to PowerShares. Over the same period, institutional usage of fundamentally weighted ETFs is forecast to rise to 68% from 61% while professional adoption of low volatility is expected to surge to 71% from 57% today. [Business is Booming for Smart Beta ETFs]
“According to our analysis published on April 24th, assets in the global ETF/ETP industry reached a new record of US$2.926 trillion at the end of Q1 2015, while assets in the global hedge fund industry, according to a new report published by Hedge Fund Research (HFR), reached a record US$2.939 trillion. Assets in the ETF/ETP industry have been gaining on those invested in the hedge fund industry with the difference narrowing from US$230 billion at the end of 2013 to just US$13 billion at the end of Q1 2015,” said ETFGI, a London-based ETF research firm, in a note published last month. [ETFs are Almost Bigger Than Hedge Funds]
ETF Trends editorial team contributed to this article.