European investment managers increase use of ETFs, bonds

Europe has seen a significant increase in the percentage of professional investors who use ETFs to access traditional asset classes, says a survey on ETF, smart beta and factor investing.

More than 90% of professional investors were using ETFs this year compared to 45% in 2006, said the 2018 survey conducted by European firm Amundi. The firm polled 163 investment professionals in Europe, one-third of whom were portfolio managers.

It also found that more respondents are using government and corporate bonds: 62% and 66%, respectively, up from 13% and 6% in 2006.

The number of managers using ETFs to access smart beta strategies (67%) isn’t as high as for accessing traditional areas of the market, but it’s still “a considerable increase” compared to 49% in 2014, the report said.

When it comes to fixed income, less than one-fifth (17%) of respondents already use smart beta and factor investing. Of those, four out of five said they invest less than 20% in assets tied to smart beta and factor investing strategies. That area of the market requires more research, the respondents said, even while some want to increase their investment.

The survey suggests more European professional investors will turn to ETFs, with 50% of those polled planning to increase their use of the products. Areas of the space they’ll be watching include responsible investment funds, emerging market equity, bond ETFs and smart beta funds.

“The rising adoption in the smart beta and factor field implies new challenges for asset managers to design the right solutions that meet allocation needs, notably in fixed income factor investing field,” said Fannie Wurtz, managing director at Amundi ETF, Indexing & Smart Beta, in the release.

A report about the survey says the respondents were from the U.K. (17%), other European Union member states (69%) and Switzerland (13%), with only 1% coming from countries outside of the European Union.

Read the full survey.

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