PA ANALYSIS: How are today's wealth managers using ETFs?

Added 19th June 2017

Assets in exchange traded funds sailed past the $4trn mark globally last month, indicating their increasing popularity among investors worldwide.

PA ANALYSIS: How are today's wealth managers using ETFs?

Wealth managers have traditionally allocated meagre chunks of their portfolios to passive, but that could be set to change.

Recent data from research provider Wealth-X, which quizzed 36 UK wealth managers, found on average just 9% of assets in portfolios contained index-tracking products.

More than a quarter of those surveyed had 0% of clients’ portfolios in passive.

But with a continued regulatory focus on fees, greater transparency and calling out of so-called benchmark-huggers, as well as the ongoing struggle to find returns amid the uncertain political environment, wealth managers are beginning to explore the ETF landscape.

According to Blackrock, there were strong ETF inflows throughout May on the back of the continuing equity bull run.

The US still rules the roost, with US ETFs making up more than half of total assets under management.

Elsewhere, statistics from Lipper revealed that, during the week ending 14 June, investors piled $17.7bn into US-based ETFs.

However, there has been an increased appetite for ETFs across the board, notably in Europe following the result of the French presidential election and the subsequent easing of the threat of populism.

Asset classes eating into the US’s market share include European equities with $23.9bn inflows in May, while investment grade corporate bonds and emerging market equities enjoyed windfalls of $22.9bn and $19.9bn respectively, Blackrock said.

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About Author

Sebastian joined Last Word Media in 2017 as editor of Portfolio Adviser. He previously spent 10 years as a journalist and editor in the UK institutional investment sector, most recently as editor of Portfolio Institutional. Prior to that, he held several roles at Professional Pensions which is part of Incisive Media.

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