etfs still represent core rather than satellite

Investors are using ETFs more heavily for dynamic strategies and specific sub-segment exposure than in the past, although the main use remains long-term buy and hold investing in broad market indices.

etfs still represent core rather than satellite


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.



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