Institutional investors dominate activity in the market for exchange-traded funds, according to new research.
Strategic Insight, New York, published this finding in a summary of results from a new survey, “ETF Trends by Channel and Investor Type”. The survey is based on asset and net flow information (updated monthly) for roughly $7 trillion of open-end stock and bond mutual fund and ETF assets across over 900 distributors and nine distribution channels.
The report finds that institutional investors hold about one-half of total equity ETF assets, accounting for an estimated 57% of total assets. Individual investors and their financial advisors own the balance (43%) of assets.
“A key driver of the heavy international equity ETF use by institutional investors is such investors’ use of ETFs to invest in emerging markets,” says Strategic Insight Assistant Director of U.S. Research Dennis Bowden in a prepared statement. He adds that one reason for this use was that ETFs allow for quick exposure to liquidity in emerging wealth regions.
The report observes the institutional market accounts for an estimated 46% of ETF assets in the U.S. market, but a larger share of aggregate activity in 2012. Institutional investors deposited an estimated net $33 billion into U.S. equity ETF strategies during the year (led by $26 billion into S&P 500 Index ETFs).