Exchange traded funds (ETFs) are a more efficient substitute for major global equity indices, according to BlackRock.
The investment manager’s global head of iShares, Mark Wiedman, said despite lacklustre equity markets in 2015, the ETF industry set a new growth record of $347 billion.
“Institutional and retail investors are using ETFs more and more, whether as a tool to express a view on almost any financial market or for long-term core investments,” Wiedman said.
“Institutional investors accelerated their use of ETFs as a substitute for futures and swaps in 2015. As banks’ balance sheet costs have ratcheted up, so too has the cost of using futures and swaps.
“ETFs are now often a more efficient substitute for major global equity indices and for bond indices like credit derivatives.”
Wiedman noted that bond ETFs had an exceptionally strong 2015, growing at 22 per cent organic growth rate.
He said bond ETFs enabled retail and institutional investors to access the bond markets at known, transparent prices and with impressive liquidity.
