New research from the European fixed income ETF provider Tabula Investment Management Limited (Tabula) reveals that 61 per cent of professional investors expect flows into fixed income investment vehicles to increase this year when compared to 2018.
Only one in five (20 per cent) expect them to fall.
Increased flows could be partly fuelled by growing innovation in the fixed income ETF sector, with 69 per cent of professional investors expecting up tick year. This could be reflected in more fixed income ETFs being launched in 2019 – 8 per cent of professional investors expect to see a ‘dramatic’ increase in the number listed, and a further 43 per cent anticipate a smaller increase.
When asked how effective they think new entrants into the fixed income ETF space will be in terms of attracting investors and growing their business, 6 per cent think they will be ‘very effective’ and 67 per cent ‘moderately effective’. Only 18 per cent think they will be ‘ineffective’.
In terms of the most important features new ETF providers need to offer in order to be successful, 70 per cent of institutional investors said it is important that they specialise in certain areas and develop propositions around this, and 62 per cent said this about having unique and innovative products.
Michael John Lytle, CEO, Tabula, says: “We launched our business last year and now have three exciting and unique fixed income ETFs listed, focusing on the European corporate credit market. We have other fixed income ETFs planned for the coming months.”
“Flows into fixed income investments, particularly through ETFs, have increased. To succeed in this market, you need to offer new investment opportunities with competitive fees which address some of the key concerns that fixed income investors face. For example, to emphasise credit returns and reduce direct interest rate risk, our current ETFs are invested in a range of liquid credit default swap (CDS) indices rather than individual corporate bonds.”