Investors have shown a growing demand for socially responsible investing (SRI)/ ethical exchange traded funds (ETFs) and interest in fixed-income smart beta solutions, according to EDHEC European ETF, smart beta and factor investing survey.
The study, which had been conducted since 2006 and aimed to provide insights into European investors’ perceptions and plans in the domain of ETFs and smart beta, found that ETF usage was becoming increasingly mainstream, with the number of respondents who used ETFs to invest in equities grow from 45% in 2006 to 91% in 2019.
Investors also decided that ETF usage was becoming more tactical and helped achieve broad market exposure as 74% of respondents said they were using ETFs frequently for this purpose.
Also, about two-thirds of respondents used ETFs to invest in smart beta in 2019 compared to 49% in 2014.
According to the survey, the key objectives driving the use of smart beta and factor investing strategy were improved performance and the belief that that the three typical factors of the credit risk market, namely carry/level of the yield curve, credit and slope of the yield curve, were. the most relevant in fixed-income markets.
Commenting on the future developments in ETFs and smart beta products, 31% respondents said they wanted to see more SRI-based ETFs and indicated that fixed income, ESG and alternative asset classes were the smart beta solutions which required further...