Competition heats up for big investors between exchange traded funds and derivatives
ETFs have enjoyed a surge of success in recent years winning a host of investors with their comparatively low fees. However, now it appears their success story has reached a new level.
According to a Financial Times report, investors are looking more and more towards ETFs as opposed to futures contracts as they bid to insure their portfolios from market risk and gain exposure.
Speaking to the publication, Shaniel Ramjee, an investment manager with Pictet, commented that ETF usage has gone up compared to futures primarily because “the variety of ETFs has increased” and “the cost has come down”.
Even though ETFs are gaining ground, however, their share of the total investment universe is still comparatively small. Research consultancy ETFGI reported that ETFs had $2.85 trillion in assets as of February 2016 – well short of the $267 trillion in exchange traded derivatives on the market.
ETFs however, are being pushed by many as a vital tool when it comes to managing investment portfolios. The number of funds has leapt over the last two years, standing at 3,882 by the end of 2015; while a wider range of indices, coupled with better liquidity, has attracted wide-scale investment.
Fees have also been lowered as competition ramps up with many new entrants attempting to take on the big players of the industry – State Street Global Advisors, Vanguard and BlackRock. Collectively, the trio account for more than two thirds of the ETF market. By contrast, fees for rolling or renewing futures contracts actually increased during 2015.
According to a recent Greenwich Associates survey reported on in the Financial Times, 43 per cent of US-based institutional investors invest at least 10 per cent of their total assets in ETFs while nearly 20 per cent of non-ETF users are considering adding them to their portfolio this year.
How do you compare futures and ETFs? Leave a comment below with your thoughts.
According to a Financial Times report, investors are looking more and more towards ETFs as opposed to futures contracts as they bid to insure their portfolios from market risk and gain exposure.
Speaking to the publication, Shaniel Ramjee, an investment manager with Pictet, commented that ETF usage has gone up compared to futures primarily because “the variety of ETFs has increased” and “the cost has come down”.
Even though ETFs are gaining ground, however, their share of the total investment universe is still comparatively small. Research consultancy ETFGI reported that ETFs had $2.85 trillion in assets as of February 2016 – well short of the $267 trillion in exchange traded derivatives on the market.
ETFs however, are being pushed by many as a vital tool when it comes to managing investment portfolios. The number of funds has leapt over the last two years, standing at 3,882 by the end of 2015; while a wider range of indices, coupled with better liquidity, has attracted wide-scale investment.
Fees have also been lowered as competition ramps up with many new entrants attempting to take on the big players of the industry – State Street Global Advisors, Vanguard and BlackRock. Collectively, the trio account for more than two thirds of the ETF market. By contrast, fees for rolling or renewing futures contracts actually increased during 2015.
According to a recent Greenwich Associates survey reported on in the Financial Times, 43 per cent of US-based institutional investors invest at least 10 per cent of their total assets in ETFs while nearly 20 per cent of non-ETF users are considering adding them to their portfolio this year.
How do you compare futures and ETFs? Leave a comment below with your thoughts.
