European asset owners increasingly embrace ETFs for transition management and liquidity needs

A study conducted by asset servicing banking group CACEIS has revealed that a substantial portion of European asset owners and decision makers are incorporating Exchange-Traded Funds (ETFs) into their investment strategies, not only for traditional index tracking but also for transition management and liquidity purposes. 

A study conducted by asset servicing banking group CACEIS has revealed that a substantial portion of European asset owners and decision makers are incorporating Exchange-Traded Funds (ETFs) into their investment strategies, not only for traditional index tracking but also for transition management and liquidity purposes. 

According to the study titled ‘Reshaping investment: Tokenisation, ETFs, and Sustainability,’ approximately 47.3% of respondents have utilized ETFs to aid in transition management. This adoption is attributed to the tradability and scalability of ETFs, making it easier for asset owners to transition to new managers or strategies seamlessly. 

The study also found that 44.2% of European asset owners include ETFs in their portfolios primarily for liquidity reasons. ETFs provide a flexible and liquid investment option, allowing asset owners to access their investments quickly when needed. 

Interestingly, the study highlighted variations in ETF usage across different European regions. Dutch and Swiss respondents were more enthusiastic about using ETFs for cost-effective index tracking and transition management. In contrast, French and UK respondents leaned towards ETFs for liquidity and exposure to thematic investments. German respondents reported employing ETFs mainly as economical index trackers and for liquidity purposes. 

Gilles Dubos, senior expert in CACEIS’ ETF division, noted that while the idea of ETFs being solely for cheap index tracking might be oversimplified, it remains one of the primary reasons why asset owners are attracted to these investment products. Moreover, the study’s findings underscore the growing sophistication and proficiency of asset owners in leveraging ETFs, particularly for transition management. 

CACEIS conducted this survey, gathering insights from over 250 asset owners, investment consultants, family offices, and sovereign wealth funds across Europe. The study focused on three key areas shaping the future of asset allocation: digital assets and tokenization, ESG and sustainability, and ETFs. 

Read more: https://www.funds-europe.com/news/asset-owners-etf-use-evolving-finds-caceis-study