Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/wealth-manager/article/a745514
Hedge fund ETF usage spikes – as satisfaction slumps
by Robert St George on Apr 16, 2014 at 09:34
The EDHEC-Risk survey also questioned the respondents on their feelings towards alternatives to ETFs, such as index derivatives and open-ended trackers.
Interestingly, these major investors deemed futures the main other option – and actually viewed them more positively overall than ETFs.
Futures were rated more highly in terms of their liquidity, costs, transparency, regulatory treatment, and the ability to control counterparty risk. ETFs were judged more favourably principally in respect of their product range and minimum subscriptions.
So will the investors act on this preference for futures? Apparently not. Asked about their future use of passive instruments, 60% said they planned to increase their use of ETFs compared with just 26% for futures. Respectively, 5% and 7% reported an intention to decrease their exposure to ETFs and futures.
The outlook is far gloomier for traditional mutual index funds. Only 18% expected to increase their use of them, and 15% predicted they would use them less. Their only significant advantage over ETFs, the survey found, was their lower counterparty risk.
For more on ETFs, visit www.citywire.co.uk/wealth-manager/cpd