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Temenos survey predicts increasing convergence of ETFs and mutual funds

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Temenos Multifonds’ 2018 ETF survey asked asset managers, custodians, third party administrators and professional service providers their views on the technical and operational pressures on fund administration faced by the booming sector.

Some 78 per cent of the respondents believed that the industry would sustain its current growth rate, with Europe dominating growth at 30 per cent; North America at 20 per cent and Asia at 29 per cent.

Some 62 per cent of respondents predict increasing convergence of ETF and mutual funds in the next two years, but the main challenge is operational technology and systems, followed by regulatory compliance and external connections to exchanges and participants.
 
Some 34 per cent of the respondents were worried about liquidity and 20 per cent were worried about operational errors. Replication risks worried 16 per cent and counterparty risk worried 15 per cent with tracking error coming in at 12 per cent.

One in four respondents felt service providers were not keeping pace with ETF growth and complexity, but service providers who can fully support ETFs will have a competitive advantage, respondents felt, with 83 per cent of them thinking full support of future advances and growth of ETFs was a competitive advantage.
 
 
 

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