Actively managed exchange traded funds (ETFs) are gaining greater relevance in investment portfolios, according to Schroders' annual investor survey, released in September. The data shows that 94% of respondents stated that active ETFs have a role in their portfolios, while only 6% said this type of instrument has no place in their portfolios. The main reasons for choosing active ETFs include the lower cost compared to investment funds (70%), intraday liquidity (50%) and better liquidity in the secondary market compared to mutual funds (43%).
Investors use active ETFs mainly for diversification (49%), tactical or satellite positioning (42%), risk management (33%) and transition management, when changing their asset allocations (29%). Schroders' head of ETFs, Tom Stephens, noted that the beauty of ETFs lies in the simplicity of the vehicle and the ease with which they can be used strategically and tactically, allowing for rapid changes with greater transparency and operational efficiency.
The study indicated that investors seek active ETFs in areas where markets may be less researched, less efficient or structurally more complex, such as small and mid-cap stocks (37%), emerging market stocks (35%), thematic or sector strategies (34%) and liquid alternatives or hedge fund-style strategies (23%).
However, there are still barriers to ETF adoption. The
