Banks race to integrate ETFs into broader liquidity strategies

Investors are using exchange-traded funds (ETFs) as tactical tools and strategic, longer-term allocations, so banks are investing heavily to capture this business.

Research recently published by Greenwich Associates revealed that allocations to ETFs in Europe increased by 50% in 2018 and now total 15% of total assets among 127 institutional ETF investors surveyed by the research firm.

These included 46 institutional funds, 48 asset managers, 14 insurance companies and 19 discretionary wealth managers.

Andrew McCollum, managing director at Greenwich Associates, attributes some of this growth to the market volatility at the end of last year.

“Our data suggests that last year’s robust growth in ETF investments by European institutions occurred not in spite of the turbulent conditions but because of them,” he says.

“As institutions repositioned their portfolios to address heightened volatility and risk, they made wide use of ETFs to implement specific modifications.

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