European ETF investors need better research and easier access, reveals survey

Sep 16th, 2015 | By | Category: ETF and Index News, an exchange-traded fund news source, has released the results of their annual survey highlighting investor perceptions of the industry and their thoughts on where the market is heading.

ETF investors need better research and easier access, says survey

Investors expect to allocate more to ETFs over the next year but platform issues and a lack of quality research are holding them back.

The survey points to strong interest and continued demand for ETF products, but also shows that a lack of understanding and structural barriers are impeding European investors from embracing ETFs in the same way US investors have.

The 123 respondents polled were predominantly independent financial advisers (62.6%), mutual fund managers (17.9%), and hedge fund managers (7.3%), with just under half managing assets in excess of €100m.

Considering the level of sophistication, it is striking to see that 28% of respondents rate their level of ETF expertise as “beginner” and 44% as “intermediate”.

This can perhaps be explained by the level of ETF usage, with over 75% of investors surveyed allocating less than 25% of their assets to ETFs. This shouldn’t be the case for long though as 62% expect to increase their allocation in the coming 12 months.

So what are the impediments to investors allocating more to ETFs? The most popular answer was education, with over 34% of respondents feeling they don’t fully understand the products. Second on the list was platform issues with investors feeling it is not easy or economical to trade ETFs.

There is clearly demand for more information and research on ETFs; forty percent of respondents believed there was not enough ETF-specific research available on platforms. “It is our firm belief that as the ETF market continues to expand in Europe, the thirst for accurate research and information about ETFs will continue to grow, and the results of this year’s survey point firmly to that,” said Jim Wiandt, Founder and President Europe.

With all the attention that smart beta and active ETFs garner, it is sobering to see that there is still great demand for straightforward so-called “vanilla” products with 48.5% wishing to see more sector-specific ETFs. Smart beta was second on the list with 38.6%.

Simon Klein, Head of Sales Passive Investments EMEA and Asia at Deutsche Asset & Wealth Management, who partnered with on the survey, said: “The results overwhelmingly point to the desire for more product innovation together with a preference for physically replicated ETFs. We believe the ETF industry in Europe has made great strides toward meeting these investor needs but that there is still much work to do for the growing range of ETF investors.”

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