Demand for active ETFs is gathering pace among investors, as they increasingly favour those over other investment vehicles, according to Fidelity International’s Professional Investor DNA Survey.
The survey of over 120 institutional investors and intermediary distributors across Europe and Asia, found demand for active ETFs is expected to increase more rapidly than any other type of investment vehicle over the next 18 months, with 37% of investors expecting to increase their allocations.
Among intermediaries, this figure soared to 61%.
The survey found that overall, nearly a quarter (24%) of professional investors are already utilising active ETFs.
The leading reasons for using active ETFs include to reduce costs (58%), to generate alpha (50%) and to access specialist areas (42%). Additionally, just under two fifths (38%) cited performance track record, while 25% said they use those to meet sustainability goals and 23% said to improve liquidity.
Alastair Baillie Strong, global head of ETFs at Fidelity International, said: “The anticipated growth in investor allocation to active ETFs identified in our survey reflects the evolving preferences of investors. There is growing investor awareness of the benefits of active ETFs; combining the advantages of traditional active funds: flexibility, potential for outperformance; and those of ETFs: lower costs, transparency and ease of access.”
PWC expects the global ETF market to grow to $20 trillion in assets under management by 2030, a 17% compound average growth rate, and Fidelity said it anticipates that active ETFs will grow even faster, increasing their share as more investors discover their benefits.
“Looking ahead, we face a backdrop of ongoing complexities in the market which can be characterised by high valuations and various uncertainty factors. Given this backdrop, ETF selection is more important than ever. At Fidelity, our active ETF strategy is to support our clients as they seek to tackle the many idiosyncratic risks posed by today’s volatile global macroeconomic and geopolitical backdrops, leveraging our long-standing active research capabilities to deliver enhanced diversification and return benefits versus passive ETFs,” Baillie Strong added.
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