Edhec finds growing interest in ETFs
European investors are increasingly keen on low cost funds that track market indices, instead of paying fund managers to pick stocks and beat the markets, and are particularly attracted to those that track alternative asset classes, according to a new survey.
The French business school Edhec asked 111 asset management firms, pensions funds and family offices whether they expected to use more index tracking funds. In the case of one type, exchange-traded funds, 69% of the investors said they would buy more.
Across all four types of passive products - exchange-traded funds, futures, total return swaps and index funds - under a fifth of investors planned to buy less.
The Edhec researchers led by Professor Noël Amenc presented their findings at Edhec's institutional investor conference in Paris today. Amenc said "this may be seen as evidence that European investors and asset managers have a growing interest in indexing."
It can be seen that exchange traded funds will benefit most from the increased use of indexing instruments. Exchange traded funds are baskets of assets that replicate the performance of a given index. They are highly liquid because units in the funds, can be bought and sold like shares. The Edhec researchers also found scant interest in so-called 'actively managed' exchange traded funds, which seek to generate higher returns through an element of stock picking.
Only 11% of the investors canvassed by Edhec said they preferred these and only 16% said they would like to see more of them.
Exchange traded funds are most heavily used for stock market investing - they accounted for 20% of the average respondents equity portfolios in Edhec's survey. For bond investments the fund did not quite make out 10% of portfolios. But there has been a surge in the use of exchange traded funds that track alternative asset classes, such as commodities, hedge funds or real estate in the past two years.
Invesco subsidiary Powershares last year became the first to announce plans for an in actively managed ETF, and State Street Global Advisors announced plans earlier this year.
In 2006, 15% of the investors surveyed by Edhec used commodity ETFs but this year that rose to 48%. The use of hedge fund trackers jumped from 7% to 30%.
del.icio.us
Digg
Newsvine
reddit
StumbleUpon