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BlackRock study finds global insurers are increasing use of fixed income ETFs

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Global insurers are innovating their investment approaches amidst rapidly changing market conditions this year, focusing on resilient portfolio construction, liquidity management, and integrated technology, according to BlackRock’s 11th annual Global Insurance Report.

The firm surveyed 370 insurance investors across 26 markets, representing nearly USD28 trillion USD in assets under management.

BlackRock writes that the insurers surveyed are also driving adoption of new investment approaches such as bond ETFs. Insurers report they plan to increase the use of fixed income ETFs in their portfolios, primarily to potentially improve liquidity (54 per cent) and yield (48 per cent).

According to BlackRock research, eight of the 10 largest US insurers now report using bond ETFs, with five having adopted them after the volatile markets of March 2020. And so far this year, BlackRock has identified 17 insurers throughout Europe, the Middle East, and Africa who are using ETFs for the first time. Given fixed income ETFs are often seen as efficient vehicles to generate yield and income in a low-cost and scalable way, BlackRock recently forecast that global bond ETF assets under management could reach USD5 trillion USD by 2030 – and insurance investors are a major driver of this new approach, the firm says.

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