Retail investors and financial advisors have contributed to the first leg of the ETF industry’s growth spurt, and institutional investors could support ETF growth ahead.
According to a recent FTSE Russell smart beta survey, global institutional asset owners currently evaluating smart beta have doubled to 36% in 2016 from 15% at the first survey in 2014, and 62% of asset owners with an existing smart beta position are now considering additional allocations.
Close to 70% of asset owners also take a long view on smart beta, planning to utilize smart-beta options five years or longer to achieve their long-term investment objectives. The rising adoption reflects asset owners’ preference for return enhancement and risk reduction.
The smart beta survey of global asset owners also revealed a developing trend in asset owners’ views and usage of smart beta strategies. The percentage of asset owners that tracking five or more smart beta indices have increased significantly to 21% in 2016 from 2% in 2014.
Due to the increased usage of smart-beta strategies, we are also witnessing traditional open-end active fund managers tiptoe into the ETF industry with smart-beta options of their own.
Financial advisors who are interested in learning more about CFP/CIMA accredited panels on the online conference can register for the February 8, 2017 ETF Trends Virtual Summit.