ETFs

Nearly half of European pension funds to increase allocation to ETFs over next five years

Some 47 per cent of pension professionals across Europe intend to increase their exposure to exchange-traded funds over the next five years, according to a survey carried out by State Street Global Advisors (SSgA).

A total of 39 per cent said that the funds they manage do not have any allocation to ETFs at the moment, while 29 per cent have between one per cent and 10 per cent of their assets in ETFs, and a further 12 per cent has between 10.1 per cent and 20 per cent.

Some 45 per cent said that their exposure to equity ETFs would increase between now and 2018, and only two per cent said it would fall. The corresponding figures for fixed income ETFs were 28 per cent and seven per cent.

When asked about what they think are the key benefits of investing in ETFs, 45 per cent of the pension professionals interviewed said cost effectiveness, followed by 41 per cent who said liquidity. This was followed by 35 per cent who said they provide market access.

In terms of how pension professionals use ETFs for their funds, 53 per cent said as tactical investments to access specific markets.  Some 17 per cent said as core holdings, and 19 per cent said core/satellite building blocks.  
 
Some 37 per cent of fund managers interviewed said that the funds they manage do not currently have any allocation to ETFs. 42 per cent have between one per cent and 10 per cent of their assets in ETFs, and a further 18 per cent have between 10.1 per cent and 20 per cent.

Over the next five years though, 42 per cent said that they would increase their exposure to ETFs, with only eight per cent saying that it would fall.

A total of 42 per cent said that their exposure to equity ETFs would increase between now and 2018, and only eight per cent said it would fall.  The corresponding figures for fixed income ETFs were 19 per cent and 13 per cent.

When asked about what they think are the key benefits of investing in ETFs, 57 per cent of the fund managers interviewed said liquidity, followed by 49 per cent who said cost effectiveness.  This was followed by 32 per cent who said they provide market access.

In terms of how fund managers use ETFs for their funds, 73 per cent said as tactical investments to access specific markets. Some 11 per cent said as core holdings and 14 per cent said core/satellite building blocks.  

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