Allocations to exchange-traded funds (ETFs) will increase significantly – from making up 29% of client portfolios on a global basis at present to 39% in two to three years from now, according to a JP Morgan Asset Management (JPMAM) survey.
On a regional level, ETFs are much more popular in the US where it accounts for 41% of client portfolios. The figure is expected to rise to 54% in by 2022.
In terms of ETF usage, Latin America (35%) leads Emea (25%) and Asia Pacific (23%). By 2022 the figure will rise to 43%, 34% and 33% respectively.
“Investors are becoming increasingly knowledgeable about ETFs and choosing to embrace the ETF vehicle which offers a number of unique benefits like daily liquidity, intraday trading, transparency and real time price monitoring. We believe we’re at the tipping point of the mass market adoption of ETFs,” said Sean Cunningham, head of Asia ETFs at JPMAM.
“ETFs are typically viewed as an extension of investment toolkits to help meet evolving asset allocation needs. And this is what we’re seeing play out in our survey findings in terms of rising ETF allocations. What’s more, we’re finding many investors are increasingly banging the drum for actively-managed ETFs,” added Cunningham.
The demand for higher ETF allocations is attributed to fees and costs, trading flexibility and the transparency of holdings.
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