Many ETF users are concerned about more than their personal bottom lines -- 37 percent of the survey’s respondents said that environmental, social and governance factors were important when selecting an ETF.
While ETFs are already proliferating rapidly into the real estate, liquid alternative and smart beta spaces, respondents said they were most interested in seeing additional options among international fixed-income and commodity-based ETFs. This year, 34 percent of respondents replied that “there are too many ETFs already.”
Investors are also looking for actively managed fixed-income and emerging-markets-equity ETFs, but respondents displayed sagging interest in active equity ETFs in the U.S. and developed markets. According to Brown Brothers Harriman, the prevalence of smart beta ETFs may be meeting demand for equity exposure that would otherwise be met by actively managed products.
Only 30 percent of the respondents said they were likely or very likely to allocate to alternative ETFs over the next 12 months, compared with 32 percent who said there was no chance they would employ alternative ETFs in their portfolios.
Furthermore, while the level of ETF proliferation has concerned some market commentators, most respondents were comfortable trading new ETFs. More than two-thirds of the respondents said that they would be willing to buy a new passive ETF within a year of its launch, and 75 percent said they would buy a new active ETF with a track record of three years or less.
For the survey, Brown Brothers Harriman and ETF.com surveyed 175 financial advisors, RIAs and institutional investors in the U.S. in fall 2016.
Advisors surveyed broke down as follows: 66 percent were RIAs, registered reps, CPAs or brokers; 4 percent were from mutual fund or insurance companies, 3 percent worked for endowments, 4 percent for hedge funds, 3 percent for pension or sovereign wealth funds, and 18 percent were classified as “other” from consultants, investment committees, investment analysts, banks and trust companies.