As the exchange traded fund universe continues to expand and attract assets, money flows reveal where investors are looking into and also the types of investors that the ETF industry is attracting.
“2017 was pretty surprising when we looked at the record level of assets everywhere in the world, record levels of net new assets going in ETFs, we also found that were an increasing number of institutions using ETFs, an increasing number of mutual funds using ETFs. Robos are really becoming a big thing where they’re looking at ETFs, and many of them are trying to get off the ground. We’re also seeing financial advisors and platforms looking at ETFs and trying to compete,” Deborah Fuhr, Co-Founder and Managing Partner for ETFGI, said at the Inside ETFs 2018 conference.
The sudden influx of assets into ETFs and the ongoing growth potential for the overall industry may be supported by the sudden increased interest among institutional level players whom have billions of dollars to throw around.
While institutional investors have been slow in adopting ETFs, there may be significant room for further growth in institutional ETF usage now that they have gotten a taste.
Institutional investors have a positive view of ETFs and primarily utilize ETFs as trading tools and for their low-cost structure. An large amount of institutional traders look to ETFs for risk management, and a majority also incorporate ETFs into a diversified portfolio because of their low-cost structure.
“58% of U.S.-listed ETF assets were held by institutions,” Fuhr added, explaining that the Securities and Exchange Commission identifies an institution as any entity that manages over a hundred million dollars in assets. “You might say, ‘well that doesn’t make sense,’ but for me it does because the way they make decisions is much more thorough and systematic when you’re large.”
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