New research from ETP provider Source finds that 76 per cent of UK professional investors who have invested in ETPs, used them to gain ‘long-term broad market exposure’. This was followed by 68 per cent who said they use them to make ‘tactical adjustments’ to their portfolios.
Some 46 per cent meanwhile said it was for ‘liquidity management’ and 46 per cent said to support ‘long/short strategies.’
The top three reasons for using ETPs for European investors as a whole are ‘to make tactical adjustments’ to their portfolios according to 73 per cent of respondents to the Source survey; next was to gain ‘long-term broad market exposure’ at 61 per cent and to ‘support a long/short strategy’ at 59 per cent.
When asked what they think the most attractive feature of an ETP is, 34 per cent of UK investors said low cost, followed by 19 per cent who said transparency. Some 13 per cent said it was liquidity and 11 per cent said providing access to hard-to-reach markets. The top four attractive features for European investors as a whole are cost (24 per cent of investors interviewed said this), liquidity (23 per cent), providing access to hard-to-reach markets (18 per cent) and transparency (15 per cent).
The top three asset classes UK ETP investors invest in through these products are regional equities (83 per cent said they invest in these), global equities (82 per cent) and government bonds and investment grade corporate debt (62 per cent for both).
For European ETP investors as a whole, 76 per cent said they use them to gain exposure to regional equities. This was followed by global equities and emerging market equities where the corresponding figures were 74 per cent and 58 per cent, respectively. Some 43 per cent said they use them to invest in investment grade corporate fixed income, and 40 per cent to gain exposure to precious metals.
Peter Thompson, President of Source, says: “Our research shows the huge range of benefits and advantages investors perceive from using ETPs. As the ETP industry grows and becomes more innovative in the products it offers, its attractiveness should also increase. This helps explain why our research shows that nearly eight out of ten investors have no plans to decrease their use of ETPs, and 39 per cent plan to purchase more this year.”