The old is new again. While exchange-traded funds (ETFs) began as an institutional product, the industry has long been touted for its growth in the financial adviser market toward a retail audience. However, a trend—confirmed by both anecdotal evidence and a Greenwich Associates survey—is emerging: The U.S. asset owner is starting to return to these products.
While it is well-known that mutual and hedge funds use the product—17 of the 20 biggest mutual fund complexes use ETFs, while 15 of the 20 largest hedge funds use them, according to State Street Global Advisors (SSgA)—their recent popularity with asset owners has been surprising. One prominent example: The $300 billion China Investment Corporate, the country’s sovereign wealth fund, has invested $2.4 billion in ETFs, a figure representing 25% of its total amount invested in U.S.-listed securities.
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To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742