SSgA Study: Australian Institutional Investors to Up ETFs

(May 31, 2011) — Following Cooper Review recommendations, Australian institutional investors are expected to increase their use of exchange-traded funds (ETFs), says State Street Global Advisors (SSgA).

According to SSgA, ETFs — which offer specific market access — should flourish among superannuation funds amid the Cooper review’s recommendations emphasizing low-cost-for-value investment outcomes.

A recent study by Connecticut-based Greenwich Associates provides further evidence in support of the investment vehicle on a global basis, noting that while ETFs encompass a fraction of institutional investor portfolios, a burgeoning number of institutions plan to increase their use of these investing instruments in the future. “Perhaps even more telling than those findings is the fact that not a single asset manager reported plans to cut ETF allocations in the coming two years, and less than one in 10 institutional funds plan to reduce allocations to ETFs in that period,” says Greenwich Associates consultant Andrew McCollum.

According to the firm, nearly one-half of the asset management firms and one-third of the institutional funds taking part in the study of current institutional ETF users plan to increase the share of portfolio assets that they invest in ETFs over the next two years.

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