Investors will increase the use of ETFs next year

As the ETF industry reaches the milestone of $12.71 trillion in global assets, Brown Brothers Harriman’s 2024 Global ETF Investor Survey reveals that investors plan to further increase their use of ETFs over the next year, while also increasing the number of ETF providers they invest with. .

Active ETFs, which have seen a staggering 38.4% annual growth over the past 10 years, will continue to be a priority for ETF investors as they seek downside protection while searching for opportunities new and innovative.

The report published by Brown Brothers Harriman and Co. (BBH), a leading global ETF custodian and administrator, collects responses from more than 300 institutional investors, fund managers and financial advisors from the United States, Europe and Greater China. In total, 40% of respondents had more than $1 billion in assets under management.

Main findings:

• ETF usage continues to grow: 82% of global investors indicated they would increase their use of ETFs, while 97% of U.S.-based investors indicated they planned to increase their usage ETFs.
• Expanding relationships with ETF providers: 74% of ETF investors plan to increase the number of issuers they work with.
• Demand for active ETFs continues to rise: the majority of ETF investors (78%) expect their overall portfolio exposure to active ETFs to increase over the next 12 months and 80% of ETF investors have purchased at least one active ETF in the last 12 months. month.
• ETFs are taking market share from mutual funds: Nearly half (48%) of investors cite index mutual funds as the primary source from which they reallocated their capital to purchase an active ETF.
• Investors seek diversification: ETF investors want to see additional product choices in the active fixed income ETF market (43%), which can help preserve capital and returns during times of economic stress, as well as liquid alternatives (42%), which offer potential diversification through exposure to alternative investment strategies.
• Fixed income takes center stage: 70% of ETF investors expect increased exposure to fixed income ETFs over the next 12 months, consistent with overall positive risk sentiment in financial markets. These include “high yield” corporate bond ETFs (30%), non-U.S. sovereign debt (30%), and mortgage or asset-backed securities ETFs (29%). .

• Digital currency ETFs are growing in popularity: nearly a quarter of investors (23%) are most bullish on the digital currency/Bitcoin asset class over the next 12 months; Other asset classes these investors are bullish on include alternatives (18%) and stocks (17%).

  “In the current environment, it is clear that investors continue to have confidence in the ETF industry and are focused on innovative products and strategies that balance the demand for strong returns with risk mitigation,” said Tim Huver , Managing Director of the ETF Services team at BBH. “In particular, we have seen the active ETF category grow in popularity and we expect even more managers and investors to allocate their funds to ETFs with an active strategy.”

  “With accelerated product innovation driving greater diversification at low cost, the ETF market continues to demonstrate that it has the tools to adapt to varying market conditions over the long term. » Huver added.

  Source: BBH

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