MJ Lytle, Tabula

Investors predict rise in smart beta and ESG in fixed income ETFs

New research from fixed income ETF provider Tabula Investment Management reveals that around 85 per cent of wealth managers and institutional investors struggle with finding new sources of return that are structural and uncorrelated.

Tabula writes that this partly explains why 51 per cent of professional investors surveyed expect to see the level of smart beta and innovation being used in the fixed income ETF sector increasing over the next three years, with only 2 per cent expecting it to decrease.
The investors also expect to see a rise in allocations being made to ESG strategies. Over half (54 per cent) expect an increase here over the next three years. Only 5 per cent think flows to ESG strategies will fall.
ETFs are increasingly being used for both smart beta and ESG specific strategies, which helps explain why they are growing in popularity, the firm says.
However, as well as investors using them, Tabula’s research also found that the average ticket size in ETF trades will increase. One in five anticipate this, with none of the investors polled expecting it to fall.    
“Fixed income ETFs not only provide easy and cost-efficient access to standard bond indices, they can also deliver new and innovative investment opportunities - this is at the centre of what we do at Tabula,” says Tabula CEO Michael John Lytle (pictured).

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