EDHEC-Risk’s annual European ETF Survey confirms high satisfaction levels and increasing interest in products tracking smart beta indices

Written on 25 March 2015.

Among the key findings of the 2014 survey:

• Satisfaction has remained at high levels especially for traditional asset classes (satisfaction rate higher or equal to 90%). There have been increases in satisfaction for corporate bond, government bond and equity ETFs but satisfaction rates for ETFs based on the most liquid ETF asset classes are far more consistent compared to those based on illiquid asset classes.

• ETF investors plan to further increase their use of ETFs and data shows growing appetite to rely on ETFs for ever more aspects of portfolio management. ETFs which until now frequently represented portfolio reallocation tools or the realisation of tactical bets are becoming candidates for core investment strategies.

• Among the biggest priorities seen by investors for future product development in the ETF space, four concern indices relating to smart beta approaches, namely smart beta equity (37%), equity factor (31%), equity style (29%), and smart beta bond (25%).

• 25% of respondents already use products tracking “smart beta” indices and more than an additional two-fifths of respondents (40%) are considering investing in such products in the near future.

• More than 80% of respondents think that smart beta indices allow factor risk premia, such as value and small cap, to be captured. This capturing of factor premia is a prime motivation for investment in smart beta ETFs for a vast majority of respondents.

• ETFs, which are increasingly considered to be a serious alternative to Futures, are perceived as superior to them with regard to minimum subscription, operational constraints, and the tax regime.

Commenting on the results of the survey, Valérie Baudson, Global Head of ETF & Indexing, Amundi, said, “This year’s survey once again shows an extremely high level of satisfaction with ETFs and confirms that investors are increasingly using ETFs for core investing. I am also particularly pleased to see growing interest in Smart Beta solutions, which we are keen to develop further while maintaining a focus on our key strengths: cost-effectiveness, innovation and quality of replication.”

A copy of the EDHEC-Risk Institute survey can be found here: EDHEC-Risk European ETF Survey 2014

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