European Survey Highlights Increasing ETF Usage

It’s no doubt the popularity of exchange-traded funds (ETFs) has only been increasing over the years. Data from the EDHEC-Risk Institute’s survey recently confirmed that this is a global trend as opposed to one just isolated in the United State.

On Thursday, the institute announced the results of the 12th EDHEC European ETF, Smart Beta and Factor Investing Survey, which was conducted as part of its Amundi research chair on “ETF, Indexing and Smart Beta Investment Strategies”. This survey, conducted since 2006, aims to provide insights into European investors’ perceptions, practices and future plans in the domain of ETFs and Smart Beta.

Key findings of the survey:

  • In 2006, 45% of respondents used ETFs to invest in equities, compared with 91% in 2019. As for governments and corporate bonds, the figures rose from 13% and 6% in 2006 to 66% and 68% respectively in 2019.
  • For the first time, the use of ETFs for tactical allocation was higher (53%) than for long-term buy and hold (51%). This more balanced usage suggests that the ETF market is maturing and users are becoming more proactive.
  • 73% of respondents are using ETFs frequently for this purpose. However, sub-segment usage has risen, probably reflecting the increasingly tactical role of ETFs in portfolios.
  • Cost and quality of replication two primary drivers for selecting ETF providers.
  • About 66% of respondents used ETFs to invest in Smart Beta in 2019, a considerable increase since 2014 (49%).

Commenting on the results of the survey, Fannie Wurtz, Head of Amundi ETF, Indexing & Smart Beta, said, “The results shows once again the significant role of ETFs in investor’s portfolios and rising interest in Fixed Income ETFs. The demand for Smart Beta and Factor solutions keep increasing too, as well as solutions that apply ESG criteria. As the leading European asset manager and a pioneer on socially responsible investing, Amundi continues innovating to answer to investors’ needs”.

Professor Lionel Martellini, Director of EDHEC-Risk Institute, added, “The 2019 edition of the EDHEC European ETF, Smart Beta and Factor Investing Survey conducted as part of the Amundi research chair at EDHEC-Risk Institute on “ETF, Indexing and Smart Beta Investment Strategies” shows a true coming of age in investors’ perception and usage of ETFs, which have become mainstream investment instruments for asset owners and are increasingly used in active market, sector-specific but also factor rotation strategies. There is a substantial appetite for new development in the area of SRI and fixed-income factor investing, where academically grounded product innovation is still needed”.

A copy of the EDHEC-Risk Institute survey is available at:
EDHEC-Risk Institute Publication: EDHEC European ETF, Smart Beta and Factor Investing Survey 2019

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