For the first time, ETFs are viewed by asset managers as affording the biggest opportunity among investment vehicles, taking the lead over institutional separate accounts, according to Cerulli Associates' most recently released U.S. monthly product trends report.
The report is based on data from Cerulli's annual Products & Strategies survey, according to Matt Apkarian, associate director, product development, at Cerulli.
The survey was conducted June through August and received more than 30 responses from asset managers of varying sizes, Apkarian said in emailed comments provided via a spokesperson.
Though open-end mutual funds are still the most-used investment vehicle by asset managers to deliver investment strategies, with 94% of managers using them according to 2023 data, the level of opportunity presented by that structure has declined in recent years, according to the September issue of The Cerulli Edge – U.S. Monthly Product Trends.
Just 50% of asset managers that offer open-end mutual funds see them as a large opportunity, the report said.
"Earning the top spot by level of opportunity in 2023, the ETF is seen as a large opportunity by 74% of asset managers that offer them," the report said.
By comparison, 70% of asset managers view institutional separate accounts as a large opportunity, according to the report. In 2022, 83% of asset managers saw institutional separate accounts as a large opportunity, while 79% saw ETFs as a large opportunity, Apkarian said.
"Among managers that do not already offer ETFs, 20% plan to build them over the next 12 months, while 50% currently are considering them but have no formal plans, again ranking ETFs the highest among product plans for structures asset managers do not already offer," the report said.
Cerulli's report also said 65% of managers indicated they are considering offering ETFs as a share class of mutual funds, which would involve using a structure patented by Vanguard Group that expired in May.
"While several firms have filed for exemptive relief, it is not clear whether they will receive approval to launch such products," the report said.