Boston, MA, March 8, 2021 – Brown Brothers Harriman & Co. (BBH), a market leading ETF custodian and administrator, today released the findings of their 8th annual global ETF investor survey. The survey found that ETF allocation continues to rise across the globe, with 72% of global ETF investors planning to increase their ETF allocation in the next year. Innovative emerging investment strategies such as thematic—including robotics and digital assets—combined with their resilience in the wake of pandemic-induced volatility helped fuel demand for ETFs in 2020. 80% of global ETF investors said they plan on increasing exposure to thematic ETFs this year. 2020 marked the dawn of semi-transparent active ETFs in the United States and demand for active ETFs may be strong in 2021 globally. More than half of respondents said they “definitely” plan to increase their exposure to these products.
BBH measured the expectations and preferences of nearly 400 institutional investors, financial advisers, and fund managers from the United States, Europe, and Greater China to identify key trends, highlight changing sentiment, and explore areas of innovation in the dynamic ETF marketplace. 2020 was marked by volatility and sell-offs, but also sizable flows into ETFs—especially fixed income ETFs, which saw strong flows following market volatility in Q1 of last year. The survey found that 66% plan to increase fixed income ETF allocations this year and 42% said they buy fixed income ETFs during periods of heightened volatility where the ETF offered transparency and liquidity when compared to the individual bonds.
“2020 was a year of volatility, but it was also a banner year for ETFs,” said Shawn McNinch, Global Head of ETF Services at BBH. “The resiliency of the ETF structure and supporting capital market infrastructure saw them not only weather the storm but cement their status as a go-to option for investors to trade, especially in times of market stress.”
Key findings include:
- ETF allocations continue to rise: Last year’s market volatility did not seem to scare our respondents away from ETFs, as 72% of global ETF investors plan to increase their ETF allocation in the next 12 months, an increase of three percentage points from our 2020 survey.
- There’s an appetite for active ETFs: 65% of respondents plan to increase their exposure to active ETFs, up from 57% in 2020. More than half of U.S. ETF investors plan on buying a semi-transparent, active ETF in the next six months.
- Thematic ETFs are going mainstream: 80% of investors will increase their allocation to thematic ETFs this year.
- Respondents are saying the right things about ESG: In five years, 56% of ETF investors expect to have at least 11% invested in ESG ETFs, but lack of industry standards and varying track records may inhibit adoption.
Read the full report here: bbh.com/etfsurvey
About Brown Brothers Harriman
BBH is a privately held financial institution that has been a thought leader and solutions provider for over 200 years. The firm serves individuals, families, businesses and institutions in its three business lines: Private Banking, Investment Management, and Investor Services. BBH’s culture of accountability fosters deep and lasting relationships built on commitment, adaptability and trust. The company is independent, selective, and specialized by design.
BBH’s Investor Services business provides cross-border custody, accounting, administration, execution and technology services to many of the world’s leading asset managers and financial institutions. With deep ETF product expertise, BBH works with both experienced ETF managers and new, innovative market entrants to introduce and grow their ETF products. BBH helps asset managers launch, list, and cross-list ETFs across the globe.
BBH operates its global business out of seventeen offices located in New York, Beijing, Boston, Charlotte, Chicago, Dublin, Grand Cayman, Hong Kong, Jersey City, Kraków, London, Luxembourg, Nashville, Philadelphia, Tokyo, Wilmington and Zürich. For more information, please visit www.bbh.com.
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