The 10th Annual 2023 Global ETF Investor Survey

  • Investor Services
A look at a decade of evolution and product innovation in ETFs, and how investors are selecting and utilizing the expanding ETF toolkit to meet market shifts.

BBH’s 10th Annual Global ETF Investor Survey captures the opinions of ETF investors around the world about how they are selecting and utilizing ETFs in their portfolios.

This year we captured responses from 325 ETF institutional investors, financial advisors, and fund managers from the U.S., Europe (including the U.K.) and Greater China. In total, 40% of respondents had more than $1 billion in AUM. The survey highlights the reactions and responses to the macro-economic changes and market shifts of the last 12 months.

As the survey enters another decade, it’s evident the last 10 years of ETF product innovation and market maturity has presented global investors with a versatile and expansive toolkit to help meet their objectives, especially in the face of recent volatility and market shifts. At its core, our findings show:

  • Investors continue to embrace ETFs as a vehicle of choice, with emerging categories such as active and fixed income continuing to gain ground
  • Investors are allocating capital from index and active mutual funds to active ETFs
  • Thematic ETF categories such as robotics / artificial intelligence and digital assets / cryptocurrencies continue to exhibit their staying power
  • ESG ETFs remain in high demand across the U.S., Europe / U.K., and Greater China

Below we highlight key findings from our survey and encourage you to download the full report here.


Key Findings

  • ETF allocation keeps pace: ETFs saw global inflows of $856 billion in 2022, the second highest total ever. Interestingly, the number of investors who plan to increase their ETF allocations in 2023 dropped 23% YoY, but overall allocations remain strong with 89% planning to maintain or increase.
  • Appetite for fixed income is growing: 62% of investors say they are extremely or very interested in fixed income, while 40% expect to direct even more of their portfolios toward short duration fixed income allocations.
  • Commodity ETFs boom as investors seek diversification: 69% plan to maintain or increase allocations to commodity ETFs. This is not surprising given that seven out of the top 10 best performing ETFs in 2022 were commodity products.
  • Active ETFs on the rise: 82% of investors plan to increase or maintain their exposures to active ETFs this year as conversions from mutual funds into actively managed ETFs intensifies. 92% of investors bought an active ETF in the last 12 months with 46% allocating from index mutual funds and 42% allocating from active mutual funds.
  • Semi-transparent structures gaining more visibility: Investor interest in semi-transparent active ETFs is reflected in the growing awareness of these ETF structures, which are still in their nascent phase. 80% of investors know what these structures are, and 70% of investors say they will or may buy one.
  • Investors are favoring alternative and managed risk strategies: To enhance diversification and manage risk in volatile markets, 59% of investors favor defined outcome ETFs, which cap their exposure to broad equity markets and offer a downside protection. 67% of investors favor strategies based on specific factors of return such as value, growth or momentum and around 70% of investors favor managed risk strategies.
  • ESG ETFs are becoming a leading source of demand: Over the last five years, AUM has grown at a phenomenal 40% CAGR, with 43 consecutive months of inflows, to reach $403 billion invested in ESG ETFs at the end of November 2022.3 53% of respondents are planning to add ESG exposures this year.
  • Crypto ETF demand persists amid market chaos: Despite a tumultuous market and value destruction, a quarter of respondents expect to allocate more of their portfolios to ETFs with cryptocurrency related exposure, compared to 33% in 2022. Institutional investors are particularly keen, with 74% saying they are extremely/very interested in this strategy. 48% of investors still plan to add cryptocurrency and digital asset-themed ETFs.
  • Investors prefer virtual to in-person meetings: 62% of investors prefer to engage digitally with sponsors, and 53% prefer having digital content and insights pushed to them. Enhancing digital engagement strategies will be key for industry participants going forward.

Big Changes

  • ETF allocations strong, but with nuances: 89% of investors plan to maintain (28%) or increase (61%) their allocations to ETFs over the next 12 months. Last year, 84% planned to increase allocations, indicating a 23% dip year-over-year, but overall, ETF allocations remain strong and promising.
  • Shifts in how investors select ETFs: When looking at the most important criteria for selecting ETFs: in the US, expense ratios replace ETF issuer brand; in Europe, tax efficiency led the way; and investors in Greater China care most about the index this year, which is up from 6th place last year.
  • Investor use of robo-advisors has tripled: Use of robo-advisors to access ETF model portfolios almost tripled year-over-year, from 10% to 29%, as investors gained more comfort with utilizing these typically lower priced advisory solutions which tend to use ETFs as core instruments in their asset allocations.
  • Volatility sparks demand for non-correlated assets: To manage risk and reduce the impact of volatility, 69% of investors plan to maintain or increase allocations to commodity ETFs, while 76% plan to maintain or increase allocations to buffer/market neutral strategies.

Brown Brothers Harriman & Co. (“BBH”) may be used to reference the company as a whole and/or its various subsidiaries generally. This material and any products or services may be issued or provided in multiple jurisdictions by duly authorized and regulated subsidiaries. This material is for general information and reference purposes only and does not constitute legal, tax or investment advice and is not intended as an offer to sell, or a solicitation to buy securities, services or investment products. All information has been obtained from sources believed to be reliable, but accuracy is not guaranteed, and reliance should not be placed on the information presented. This material may not be reproduced, copied or transmitted, or any of the content disclosed to third parties, without the permission of BBH. Pursuant to information regarding the provision of applicable services or products by BBH, please note the following: Brown Brothers Harriman Fund Administration Services (Ireland) Limited and Brown Brothers Harriman Trustee Services (Ireland) Limited are regulated by the Central Bank of Ireland, Brown Brothers Harriman Investor Services Limited is authorised and regulated by the Financial Conduct Authority, Brown Brothers Harriman (Luxembourg) S.C.A is regulated by the Commission de Surveillance du Secteur Financier. All trademarks and service marks included are the property of BBH or their respective owners. © Brown Brothers Harriman & Co. 2023. All rights reserved. IS-08752-2023-03-21

As of June 15, 2022 Internet Explorer 11 is not supported by BBH.com.

Important Information for Non-U.S. Residents

You are required to read the following important information, which, in conjunction with the Terms and Conditions, governs your use of this website. Your use of this website and its contents constitute your acceptance of this information and those Terms and Conditions. If you do not agree with this information and the Terms and Conditions, you should immediately cease use of this website. The contents of this website have not been prepared for the benefit of investors outside of the United States. This website is not intended as a solicitation of the purchase or sale of any security or other financial instrument or any investment management services for any investor who resides in a jurisdiction other than the United States1. As a general matter, Brown Brothers Harriman & Co. and its subsidiaries (“BBH”) is not licensed or registered to solicit prospective investors and offer investment advisory services in jurisdictions outside of the United States. The information on this website is not intended to be distributed to, directed at or used by any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. Persons in respect of whom such prohibitions apply must not access the website.  Under certain circumstances, BBH may provide services to investors located outside of the United States in accordance with applicable law. The conditions under which such services may be provided will be analyzed on a case-by-case basis by BBH. BBH will only accept investors from such jurisdictions or countries where it has made a determination that such an arrangement or relationship is permissible under the laws of that jurisdiction or country. The existence of this website is not intended to be a substitute for the type of analysis described above and is not intended as a solicitation of or recommendation to any prospective investor, including those located outside of the United States. Certain BBH products or services may not be available in certain jurisdictions. By choosing to access this website from any location other than the United States, you accept full responsibility for compliance with all local laws. The website contains content that has been obtained from sources that BBH believes to be reliable as of the date presented; however, BBH cannot guarantee the accuracy of such content, assure its completeness, or warrant that such information will not be changed. The content contained herein is current as of the date of issuance and is subject to change without notice. The website’s content does not constitute investment advice and should not be used as the basis for any investment decision. There is no guarantee that any investment objectives, expectations, targets described in this website or the  performance or profitability of any investment will be achieved. You understand that investing in securities and other financial instruments involves risks that may affect the value of the securities and may result in losses, including the potential loss of the principal invested, and you assume and are able to bear all such risks.  In no event shall BBH or any other affiliated party be liable for any direct, incidental, special, consequential, indirect, lost profits, loss of business or data, or punitive damages arising out of your use of this website. By clicking accept, you confirm that you accept  to the above Important Information along with Terms and Conditions.

 
1BBH sponsors UCITS Funds registered in Luxembourg, in certain jurisdictions. For information on those funds, please see bbhluxembourgfunds.com


captcha image

Type in the word seen on the picture

I am a current investor in another jurisdiction