The potential for ETFs to be used in dynamic asset allocation in precisely defined market segments or styles has not yet been fully exploited, according to the Edhec-Risk Institute.
In its Edhec European ETF Survey 2010, the institute says although the ETF industry has entered a phase of increased maturity, there is still room for growth, with survey respondents seeing a need for new products on emerging markets and alternative asset classes.
Edhec-Risk Institute head of applied research Felix Goltz says: "The main finding was we can see the use of ETFs is mainstream now and that is remarkable given the first ETF in Europe was launched 10 years ago. We really see a lot of signs that users have become more aware of the detailed mechanisms of ETFs."
He says investors have become more sophisticated in using ETFs, with some referring to them as an information source, rather than looking at the indices themselves or the underlying markets.
He adds: "The interest investors showed for new forms of ETFs and new products was a surprise - there was a lot of interest for emerging markets and also for different indices."
The survey shows ETFs are now very widely used and investors are more advanced in using and trading these funds, as exemplified by over-the-counter trading and securities lending.
It says the positive impact of ETFs on the market as a whole, including the underlying assets, is being felt by a growing number of industry participants.
Along with growth in use of ETFs, the research shows satisfaction rates have reached highs of 90% for equity, government bond and infrastructure funds, above two-thirds for other ETF products.
The survey is part of the second year of the Amundi ETF "Core-Satellite and ETF Investment" research chair. In total, there were 272 respondents, who are European professionals in the asset management industry with experience of ETF instruments.
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