Institutional Investors Will Play a Big Role in ETF Growth Ahead

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Pension funds expect to use ETFs for liquidity management going forward as well as a way to gain targeted market exposure. Hedge funds and more tactical traders will utilize leverage and inverse ETFs to execute quick, high-conviction trades, the survey found.

The survey also laid out the growing trend of falling fees associated with ETFs, with total expense ratios having fallen to 27 basis poitns from 29 basis points in the past year. Around 71% of respondents indicated margins will likely continue to fall over the next three years as providers work in an increasingly competitive environment.

Among the various strategies available, the broad passive funds would likely benefit the most from the ongoing investment trends. “ETFs should continue to benefit disproportionately” from this trend because of their low fees and intra-day liquidity, which is attractive in times of market volatility, according to Financial News London.

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