Actively managed strategies are in demand among global ETF investors, and global interest is gaining pace, according to Brown Brothers Harriman’s ninth annual Global ETF Investor Survey.
Active strategies represented about 10% of global net inflows in 2021, driven mostly by U.S. investors. Per the survey, which polled 386 ETF investors from the U.S., Europe (including the U.K.), and Greater China, 78% of global respondents said they plan to increase their exposure to active ETFs this year, up from 65% in 2021.
Meanwhile, half of U.S. ETF investors surveyed said they plan to buy semi-transparent, active ETFs.
“In our own survey work, we also see this pattern: Active is definitely getting a seat at the table,” said ETF Trends’ Dave Nadig. “When markets are as squirrely as they have been, it shakes investor confidence. Switching to an active manager at least ‘feels’ like doing something, even if it’s just for a satellite position. It quite literally makes investors feel like someone is ‘minding the store.’”
Nadig added: “Of course, historically speaking, the price you pay in performance for that ‘minding the store’ doesn’t work out in investors’ favor. But volatility puts assets in motion and makes active at least feel like it should work.”
The survey revealed that overall, 84% of global investors surveyed plan to increase allocations to ETFs in the next year. When asked about specific strategies and sectors, investors plan to increase holdings in thematic, active, and fixed income ETFs, suggesting another strong year of growth for the market.
“2021 was a year of record growth, and 2022 looks set to follow suit as investors demonstrate their confidence in ETFs and increase their allocation across multiple strategies,” said Shawn McNinch, global head of ETF services at BBH, in a news release announcing the survey results. “With allocations rising across active, thematic and ESG strategies globally, it’s evident that the depth of choice in the market continues to provide new portfolio opportunities for investors of all types.”
All told, ETFs broke $10 trillion in assets under management and collected $1.2 trillion in flows through 2021, according to ETFGI. Much of that was driven by U.S. investors, who invested $3 into ETFs for every $1 in mutual funds.
“While the mutual fund market asset base is still considerably larger than ETFs, the difference narrows each year and likely will continue to do so, especially as ETF flows remain strong, mutual fund to ETF conversions gain momentum and global retail markets grow,” McNinch added.
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