ETFs at the Core of Global Investment Strategy
Global institutional investors are internalizing asset management through ETFs, reducing reliance on specialized management firms. ETFs enable swift and efficient asset allocation while accommodating diverse investment strategies. Their usage is notably increasing for short-term liquidity management and maintaining market exposure. Additionally, the rapid growth of AI-based active ETFs is noteworthy.
Emerald Yau from FTSE Russell notes that ETPs are evolving from simple tools tracking historical market returns to versatile instruments integrating complex investment strategies. With advancements in index design technology, early ETPs targeted entire markets but are now segmented by sectors or company sizes, spearheading various strategies including smart beta. Recently, indices leveraging AI beyond ESG and climate transition themes are emerging. These developments offer opportunities not just for basic asset allocation but for swift investments in specific themes or sectors. A reported case includes pension funds strategically using ETFs for Chinese tech stocks.
According to a survey, 46% of institutional investors plan to increase their use of active ETFs by 2025. This trend combines the efficiency of passive strategies with the flexibility of active ones, garnering attention. The significance of ETPs is expected to increase continually.
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ETFs are like Lego blocks... Institutional investors directly manage asset allocationGlobal institutional investors are moving towards building portfolios using exchange-traded funds (ETFs), reducing the necessity of outsourcing asset management to professional firms. Emerald Yau, Head of FTSE Russell Asia-Pacific, stated at the 'KOREA CAPITAL MARKET CONFERENCE 2025' (KCMC 2025) held at the Westin Chosun Hotel on the 29th, that 'institutional investors are using ETFs as a channel to internalize asset management.' Yau noted that by utilizing ETFs, institutional investors are implementing asset allocation strategies as freely as assembling Lego blocks in a portfolio.
FTSE Russell Executive Director: "ETPs Evolve from Simple Beta Tracking to 'Essential Tools for Institutional Investors'" [KCMC 2025] - Smart Today|Smart Today=Kim Na-yeon Reporter| Exchange-Traded Products (ETPs), which were previously used to replicate market returns, are transforming into tools that perform the core management strategies of institutional investors. Emerald Yau, Head of APAC Equity Index Products at global index provider FTSE Russell, discussed this on the 29th at KCMC 2025 'Institutional ET