EUROPE - Nearly half of Europe's most powerful investors want more emerging market equity ETFs in the marketplace, suggests a survey from EDHEC Risk and Asset Management Research Centre.
The survey, covering 360 pension fund and other institutional investors, as well as private wealth managers, found emerging market equity ETFs were the product which respondents most wanted to see developed, backed by 47% of interviewees.
Approximately a third of respondents would also like to see products developed in alternative asset classes, especially in commodities (35%), currencies (30%) and hedge funds (28%).
The survey, carried out in January and February this year, underlined the growth in popularity of ETFs for all asset classes, as it found ETFs are use within the equity universe by 95% of those questioned.
The biggest increase in take-up has been for ETFs in government bond investments, suggested the study, as the number of investors using them has doubled from 40% last year to 80% in 2009.
"There is a perception that emerging markets will recover better because, for example, their banks are much more stable than in developed countries," said Manooj Mistry, head of ETF provider db x-trackers UK. "ETFs provide a low-cost way to invest, allowing managers to time investment decisions according to market conditions."
Manooj said db x-trackers were constantly looking at other ideas for emerging market ETFs, though the main criterion were tradability and the grow potential of assets under management.
ETFs make up around one-third of the average survey respondent's equity investments, while they also account for 22% of a fund's allocation to commodities.
Evidence from the research also indicated ETFs still tend to be used by investors for broad market coverage and are more frequently used than ETFs for specific sub-segments.
Interestingly, EDHEC found long-term buy-and-hold investments are more frequent than short-term investment - an aspect the business school research department found interesting as ETFs are liquid and easily traded, and offer a way of tracking particular sub-segments of the market.
In contrast, the survey showed satisfaction with real estate and hedge fund ETFs has fallen so far in 2009 as the holdings in hedge fund ETFs has dropped from 7% to 5%.
Db x-trackers claimed institutional money has poured into its emerging markets trackers over the past few months.
Assets under management in the DB X-trackers MSCI Emerging Markets TRN Index ETF rose to €1.9bn by 1 May from €1.4bn at end-December 2008.
Asia was also seen to be a popular market, as the value of the DB X-tracker MSCI EM Asia TRN Index ETF doubled from €170m at the end of December to €439m at 1 May.