After Brown Brothers Harriman published its ninth annual Global ETF Investor Survey in March, the firm’s head of U.S. ETF services Ryan Sullivan was surprised at how much ETFs have gained in popularity from the year prior.
“In nine years of doing the survey, we’ve never seen as high a response rate as we saw this year in terms of planned increased allocations to ETFs,” Sullivan told NYSE’s Judy Shaw at Exchange: an ETF Experience 2022, noting that 84% of respondents planned to add to their allocations in 2022.
“That’s the highest we’ve seen in nine years,” Sullivan said.
In addition to increased adoption, the survey also revealed that investors were increasingly quick to adopt thematic, defined outcome, and semi-transparent ETFs. And for the first time in the survey’s history, BBH saw liquidity emerge as a top consideration among respondents across all markets.
In terms of specific kinds of ETFs, the survey also highlighted the growing interest in both semi-transparent and thematic ETFs among investors. According to Sullivan, “50% of our investors said they plan to add semi-transparent products to their portfolios in the U.S.,” while “about 40% of our respondents said they plan to add to about 10% of their portfolio allocation to thematic ETFs.”
According to Sullivan, this notion of advisors “looking to bring more tools into how they create their own portfolios” is “something that continues to evolve” every year. Do they build the portfolio from the bottom up, or do they bring in a model from a third party or a potential ETF issuer to help?
The BBH survey shows that “about 60% of our investors… are using models, either from the ETF issuers themselves, from their own home office, or from another third party.” Sullivan added that he thinks that “we’ll continue to see that grow in the coming years and that’ll be a big tailwind for the ETF industry as well.”
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