July 8th 2013 at 3:15pm by Tom Lydon
Mirroring the growing sentiment in the U.S., institutional investors in Canada are also embracing exchange traded funds and are expecting to increase allocations to the investment vehicle in the years ahead.
According to a Greenwich Associates study, titled Versatility Fuels ETF Growth in Canadian Institutional Portfolios, the share of Canadian institutional funds using ETFs increased to 12% in 2012 from 11% in 2011. Looking at institutional funds with over $1 billion in assets under managements, 21% of larger institutional funds utilized ETFs in 2012, compared to 15% in 2011. [More Institutional Investors Seen Using ETFs]
“Given the simplicity and flexibility of exchange traded funds, we’re not surprised that institutional investors are turning to ETFs more regularly to achieve their investment goals,” Greg Walker, Managing Director, Head of iShares Institutional Business, BlackRock Canada, said in a press release. “As indicated in the Greenwich survey, institutional use of ETFs is on the rise in Canada as institutional funds, investment managers and insurance companies discover new functions for these products within their investment portfolios.”
The study found that there are two reasons to increased use among institutional investors: