Active, low-vol and ESG top ETF trends in global survey

Active strategies, low-volatility products and funds focused on environmental, social and governance (ESG) factors will be popular with ETF investors this year, according to a global industry survey.

U.S. investors ranked active and low-volatility ETFs as the strategies they would like to see more of in 2020, according to a survey conducted by New York-based financial firm Brown Brothers Harriman and news service ETF.com.

Almost two-thirds of the Americans surveyed (62%) said they planned to increase their exposure to actively managed ETFs.

Globally, respondents they would most like to see more ESG ETFs in the market, and three-quarters of respondents said they plan to increase their allocation to these products in the coming year.

The survey noted that ESG funds globally represent only US$52 billion of the US$6 trillion in ETF assets. However, in five years, one-fifth of respondents said they planned to have between 21% and 50% of their portfolios in ESG funds.

When it comes to purchase decisions, investors are looking for higher assets under management (AUM). Globally, the survey found that 37% of respondents want at least US$25 million managed by a fund before buying.

“Some larger managers have already taken note by ‘bringing their own cash’ to their products as part of their launch strategy, while intermediary platforms are increasingly seeking AUM minimums before adding new ETFs,” the report said.

The survey also noted interest in ready-made ETF solutions. More than 70% of respondents said they’ve used model portfolios that hold ETFs in the past year.

When it comes to thematic products, the survey found internet and technology-focused ETFs were most popular (27%), followed by robotics and artificial intelligence (19%), environment and sustainability (18%), cryptocurrency (13%) and healthcare (12%).

Brown Brothers Harriman conducted the survey with news service ETF.com. The firm surveyed 300 institutional investors, financial advisors and fund managers from the U.S., Europe and China. Read the full survey here.

Mark Burgess

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Mark was the managing editor of Advisor.ca from 2017 to 2024.