Asset owners’ ETF use evolving, finds CACEIS study

CACEIS, ETFsA significant proportion of European asset owners and decision makers are using ETFs for transition management and liquidity purposes in addition to their traditional index-tracking capabilities, a study by asset servicing banking group CACEIS has found.

Almost half (47.3%) of respondents to the CACEIS study ‘Reshaping investment: Tokenisation, ETFs and Sustainability’ have used ETFs as an aid for transition management due to their tradability and scalability, facilitating the move to a new manager or strategy more easily.

The study also found that liquidity was a key reason for inclusion in portfolios for 44.2% of European asset owners. However, the study revealed different approaches to ETF use around Europe.

Dutch and Swiss respondents, for example, were the most enthusiastic users of ETFs for cheap index tracking and transition management. French and UK respondents were more likely to use ETFs for liquidity and thematic exposure. German respondents, meanwhile, reported using ETFs predominantly as cheap index trackers and for liquidity purposes.

Gilles Dubos, senior expert in CACEIS’ ETF division, said: “Cheap index tracking might be reductive, but it is still one of the biggest reasons asset owners like these products.

“However, the popularity of ETFs for transition management shows how sophisticated and adept they have become at wielding these products.”

CACEIS surveyed more than 250 asset owners, investment consultants, family offices and sovereign wealth funds across Europe to give their opinions on three key areas shaping the future of asset allocation: digital assets and tokenisation; ESG and sustainability; and ETFs.

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