This is the finding of a report by the EDHEC-Risk Institute on behalf of ETF provider Amundi, called "Core-Satellite and ETF Investment".
The report also found investors were moving towards applying ETFs for portfolio optimisation and risk management, despite seeing them as index-replicating rather than active funds.
Another trend has been an increasing demand for ETFs based on new forms of indices, such as alternative-weighted indices, which is up from 29% to 39% over the past year.
EDHEC-Risk said industry communication on the risks of ETFs has led to the counterparty risk of physical ETFs being underestimated.
As a result investor think full physical replication is less risky than synthetic replication in terms of counterparty risk because they fail to appreciate the risks associated with securities lending.
