At first used by Institutional Investors for manager transitions, rebalancing and other tactics, fund managers strategic use of ETFs are on the rise, in particular to gain long-term exposure to desired asset classes, according to a freshly-published study by Greenwich Associates.
In the hot-off-the press study, “57% of institutional ETF users employ these products to achieve strategic allocation ranges, while 20% of institutional funds use ETFs for tactical purposes to achieve alpha, as do 38% of asset managers using these products.”
The study also concluded that “once institutions integrate ETFs into their manager transition or cash equitization processes, they relatively quickly begin seeing additional applications for the products.” Of equal note, holding periods of ETFs by institutional fund and other asset managers is on the rise, according to the study.
Noted Chris Hempstead, head of ETF Execution for WallachBeth Capital, “The Greenwich study does a good job of confirming what we’re seeing and hearing from clients; more tactical applications, and those that have longer-hold horizons are adding an options overlay element to their strategies so as to cushion volatility and enhance overall alpha.”
For the full report, greenwich associates – strategic uses for etfs