London, 18 May 2015: New research(1) commissioned by Source, one of the largest providers of Exchange Traded Products (ETPs) in Europe, reveals that European professional investors say they use ETPs most often to make ‘tactical adjustments’ to their portfolios. Nearly three out of four (73%) of those interviewed mentioned this as a reason for investing in ETPs, followed by 61% who said they use them to gain ‘long term broad market exposure’. Other responses include: ‘supporting a long/short strategy (59%), liquidity management (52%), sector rotation (40%) and transition management (26%).
When asked what they think the most attractive feature of an ETP is, 24% of investors interviewed said cost, and this was closely followed by liquidity (23%), providing access to hard-to-reach markets (18%) and transparency (15%).
In terms of the asset classes in which they invest through ETPs, 76% said they use them to gain exposure to regional equities. This was followed by global equities and emerging market equities where the corresponding figures were 74% and 58%, respectively. Some 43% said they use them to invest in investment grade corporate fixed income, and 40% to gain exposure to precious metals.
Peter Thompson, President of Source, says: “Our research shows the huge range of benefits and advantages investors perceive from using ETPs. As the ETP industry grows and becomes more innovative in the products it offers, its attractiveness should also increase. This helps explain why our research shows that eight out of 10 investors have been using ETPs and 39% plan to purchase more this year.”
Source UK Services Limited is authorised and regulated by the Financial Conduct Authority in the UK.
(1) Source commissioned the research company Prescient to interview 751 professional investors in a range of organisations and job roles across Europe. Telephone interviews took place between 14th November and 18th December 2014 across 11 countries. Each of those interviewed are responsible for at least £50 million worth of private client investments or £100 million of institutional assets.