Despite a slowdown in net inflows last year, more than half (56%) of professional investors using exchange-traded funds plan to increase their exposure to equity ETFs in the next two to three years, while 40% seek to do the same with fixed income ETFs over that time period.
These were some of the findings by the fourth annual Trackinsight Global ETF Survey released Monday in partnership with J.P. Morgan Asset Management and State Street.
Indeed, the survey revealed that net inflows into ETFs had dropped to $782 billion in 2022 from $1.2 trillion in the prior year. Nonetheless, interest in investing in ETFs remains firm.
Respondents universally cited low fees, easy diversification and accessibility as the primary reasons to use ETFs, while nearly 50% of respondents in the Americas mentioned tax efficiency as a key aspect behind the popularity of ETFs.
Moreover, some 94% of respondents cited liquidity as a key attraction of ETFs. More than 70% of respondents said ETFs provide additional liquidity during volatile markets.
The increased interest in fixed income ETFs, the report noted, coincides with expectations of easing inflation and a possible slowdown in interest rate hikes. The development of sustainable bond ETFs is also expected to contribute to the growth of this asset class, the report said.
Interest is also strengthening in actively managed ETFs, particularly those that use equity strategies.
"The momentum in the ETF market shows no sign of letting up," said Bryon Lake, global head of ETF solutions at J.P. Morgan Asset Management in a news release issued in conjunction with the survey. "An active ETF revolution is underway, with nearly 70% of global ETF buyers predominantly using active ETFs for equity, fixed income and thematic exposures."
The survey also highlighted the continuing interest in thematic investing, as more than 40% of respondents said they expect to increase in their allocation over the next few years, primarily for diversification and strategic allocation.
ETF investors are also concerned about the practice of greenwashing by corporations, with a majority of investors seeking more transparency across investment products.
Moreover, while 30% of respondents said they are planning to increase their exposure to ESG-aligned and sustainable ETFs, they also cited that "inconsistencies with ESG analysis" posed a "significant hurdle" to such investments.
Trackinsight is an independent ETF database platform, the survey noted. The survey evaluated the responses of 549 professional investors who manage almost $900 billion of assets through ETFs on behalf of the world's largest asset managers, family offices, private banks, institutions and financial advisers.
