Widely-applauded European rules on exchange-traded funds (ETFs) have supported their continued popularity among institutional investors, new data has revealed.
The European ETF survey 2012 from EDHEC Business School's Risk Institute shows high satisfaction rates and growing usage for ETFs, which the report attributes to industry support for European Securities and Markets Authority (EMSA) guidelines that have increased disclosure and transparency.
Equity ETF satisfaction levels were particularly strong with 90% of respondents continuing to use the instruments, while ETFs for corporate bonds and infrastructure have increased in usage.
The report, based on responses from 212 European buy-side professionals active in ETF markets, found that ESMA's efforts to improve investor protection - including guidelines increasing disclosure for index-tracking UCITS funds - were welcomed by 77% of those polled.
According to the report, 72% of institutional investors prefer passive ETFs, compared to only 6% who use active ETFs and 22% who use both, although the combined figure for active ETFs and 'both' (28%) was higher than last year's 23%.
"The increased interest may be related to the increased levels of disclosure and transparency which are being imposed on actively managed ETFs by the new 2012 ESMA Guidelines aimed at increasing investor protection," the report read.
"Despite the growing maturity of the ETF market, this year's survey has shown again that the level of satisfaction towards ETFs remains extremely high and that the vast majority of investors plan to increase their usage," said Valérie Baudson, managing director, Amundi ETF, which currently holds the EDHEC-Risk Institute chair and helped compile the report. "The positive changes in investor perception regarding risks and transparency are significant developments for the industry."
ETFs were introduced to Europe in 2000, while trading in the US began in 1989. There are around 3,300 ETFs worldwide, managing US$1.6 trillion. In Europe, just over 1,300 ETFs manage US$308.1 billion.