DWS finds increased use of ETFs among pension funds

Jun 13th, 2018 | By | Category: ETF and Index News

The average pension fund holds 32% of its investments in passive products, in the form of either index funds, passive mandates or ETFs, according to a DWS-sponsored report: “Passive Investing: reshaping the global investment landscape”.

Thorsten Michalik, DWS’s co-head of Global Coverage Group and regional head of asset management, EMEA.

Thorsten Michalik, DWS’s regional head of asset management, EMEA.

The analysis, conducted by consultants CREATE-Research, came from a survey of over 150 pension plans globally which are collectively responsible for around £2.5 trillion in assets under management.

Two-thirds (66%) of pension fund managers surveyed regard passive investments as an established, mature part of their portfolio.

The report also found that among passive investors there is a shift from market capitalization-weighted indices towards smart beta, factor-based, ESG (environmental, social and governance) and other thematic strategies. Such exposures can all be easily obtained via low-cost ETF wrappers.

Thorsten Michalik, DWS’s regional head of asset management, EMEA, commented, “Over the last decade we have seen a fundamental reshaping of asset management, with some strategies becoming standardized and made easily accessible at low cost, which means investors today have an unprecedented level of choice to help them meet their asset allocation goals.”

Almost 50% of pension funds plan to increase their passive ESG allocations by more than 5% of assets under management, according to the report.

Interestingly, only 10% of survey respondents expect passive investments to replace active, with the majority expecting both to co-exist in pension portfolios.

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