ETF Investors Indicate Active Strategies and Product Innovation Will Fuel the Industry’s Continued Growth: BBH 2024 Global ETF Investor Survey

A new era for actives emerges as investors up demand for further product expansion.

As the ETF industry reaches a milestone of $12.71 trillion in global assets, the Brown Brothers Harriman 2024 Global ETF Investor Survey finds that investors plan to further increase their use of ETFs in the next year, while also expanding the number of ETF providers they invest with. Active ETFs, which have grown at a staggering 38.4%ⁱ annual rate over the past 10 years, will continue to be a focus for ETF investors as they seek downside protection while pursuing new and innovative opportunities.

The report released today by Brown Brothers Harriman and Co. (BBH), a leading global ETF custodian and administrator, captures responses from more than 300 institutional investors, fund managers, and financial advisors from the United States, Europe, and Greater China. In total, 40% of respondents had more than $1 billion in AUM.

Key Findings:

• ETF Usage Continues to Grow: 82% of investors globally indicated that they would be increasing their use of ETFs, while 97% of U.S. based investors noted they’re planning to increase their ETF usage.
  
  
  
  
• ETF Provider Relationships Expanding: 74% of ETF investors plan to increase the number of issuers that they work with.
  
  
  
  
• Demand for Active ETFs Continues to Rise: A majority of ETF investors (78%) predict an increase in their overall portfolio exposure to active ETFs in the next 12 months and 80% of ETF investors have purchased at least one active ETF in the past 12 months.
  
  
  
  
• ETFs are Taking Market Share from Mutual Funds: Almost half (48%) of investors cite index mutual funds as a top source from which they reallocated capital to purchase an active ETF.
  
  
  
  
• Investors Seek Diversification: ETF investors want to see additional product choices in the active ETF market for fixed income (43%)—which can help preserve capital and returns in times of economic stress—as well as liquid alternatives (42%), which offer potential diversification through exposure to alternative investment strategies.
  
  
  
  
• Fixed Income Takes Center Stage: 70% of ETF investors predict increased exposure to fixed income ETFs in the coming 12 months in line with general positive financial market risk sentiment. These include corporate bond “high yield” ETFs (30%), non-U.S. sovereign debt (30%), and mortgage-backed or asset-backed securities ETFs (29%).
  
  
  
  
• Digital Currency ETFs Gain Popularity: Nearly a quarter of investors (23%) are most bullish about the digital currency/Bitcoin asset class over the next 12 months; other asset classes these investors are bullish on include alternatives (18%) and equities (17%).

“In the current environment, it’s clear that investors are still confident in the ETF industry and are focused on innovative products and strategies that balance the demand for strong returns with mitigating risk,” Tim Huver, Managing Director, ETF Servicing team at BBH said. “In particular, we’ve seen the active ETF category grow in popularity and expect even more managers and investors to allocate their funds to ETFs with an active strategy.”

“With accelerated product innovation driving greater diversification at a low cost, the ETF market continues to demonstrate that it has the tools to navigate the varying market conditions for the long term,” Huver added.

Read the full report here: BBH Global Investor ETF Survey.

About Brown Brothers Harriman

BBH is a privately-held, global financial services firm founded in 1818 and headquartered in New York City. BBH is known for its exceptional client service, technology expertise, and customized solutions. For 200 years its client-centric approach has fostered deep and lasting relationships built on commitment and trust. As a private partnership, free from the distractions of short-term or public market expectations, BBH is built to put clients first and create success that lasts.

BBH’s Investor Services business provides asset servicing, capital markets, and operating model solutions to many of the world’s leading asset managers and financial institutions. Asset servicing solutions include cross-border custody, accounting, and administration and related services. Capital markets solutions include operational and strategic foreign exchange and securities lending services. BBH’s operating model solutions solve for platform, data, and connectivity challenges across open-architecture operating models for asset managers, asset owners, and financial institutions.

BBH operates in over 90 markets worldwide from 18 offices. BBH employs approximately 6,000 professionals. For more information, please visit www.bbh.com.

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ⁱ ETFGI

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