Nearly half (40%) of all client money allocated to ETFs will be in active or smart beta ETFs by 2023, according to a survey.
Respondents to JP Morgan Asset Management’s (JPMAM) Second Annual Global ETF Survey believe their clients’ ETF allocations held in passive products will decline to 61% of portfolios over the next three years, while the share of assets in active and smart beta ETFs will continue to grow substantially.
While US-based respondents expect active ETFs to rapidly gain an edge in the next few years, making up more than a quarter of ETF allocations by 2023, Apac-based respondents predict smart beta products will grow significantly faster in that region.
Cost efficiency, ease of trading and liquidity, diversification and risk management are cited by global respondents as the most important benefits of ETFs.
Beyond this, they increasingly view active ETFs as a tool to add alpha, or as a means to achieve specific investment objectives, like sustainable investing.
Olivier Paquier, JPMAM’s head of ETF distribution in Emea, said: “ETFs are increasingly viewed as tools that can help to meet varied financial and investment objectives.
“We think ETFs will continue to be utilized as cost-efficient, flexible wrappers for a growing range of investment styles and underlying assets, as the technology continues to play a role in the democratisation of investing.”
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