Insurers Take a Stab at the ETF Industry

“When you have multiple insurers with an ETF program then you want to jump in,” Paul Kim, head of ETF strategy at Principal, told Bloomberg, projecting the company would like to have as many as 30 funds within five years. “It’s a rational competitive response.”

Insurers are warming up to the idea of an ETF of their own after using ETFs to manage their own money. Almost half of those surveyed by Greenwich Associates revealed last year that they’d start using ETFs within the past two years and almost 25% started buying within the previous 12 months.

Looking ahead, a regulatory change could make these funds even more appealing, potentially changing the accounting treatment of ETFs for insurers that could lead to adding more than $300 billion to bond ETFs alone over the next firve years.

“As people are becoming more educated and more familiar with ETFs, you’re seeing the usage of them increase proportionately,” Lance Humphrey, a money manager in the global multi-assets team at USAA, said told Bloomberg.

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