BBH 2023 Global ETF Investor Survey: Investors Share ETF Allocation Plans in Face of Market Shifts

April 03, 2023
  • Investor Services
BBH’s 10th Annual Global ETF Investor Survey captures the opinions of ETF-focused investors around the world about how they are selecting and utilizing ETFs in their portfolios.

Boston, MA, April 3, 2023 – Market volatility and a challenging economic climate have been met with substantial shifts in how and where ETF investors are allocating their capital, according to the findings of Brown Brothers Harriman & Co.’s (BBH) 10th annual Global ETF Investor Survey. BBH is a global ETF-custodian and administrator.

The report, released today, 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 allocations hold strong: Capital continues to pour into ETFs, with 89% of investors planning to increase (61%) or maintain (28%) their ETF allocations in the next 12 months. However, last year 84% planned to increase their allocations, marking a 23-percentage point drop.
  • Investors are leaning into the Fed’s pivot: Appetite for fixed income has grown in the current interest rate environment, with 46% of respondents expecting to increase their allocation to fixed income ETFs, and 40% expecting to allocate more to short duration fixed income ETFs.
  • Robo use has tripled: Use of robo-advisors to access ETF model portfolios almost tripled year-over-year, from 10% to 29%.
  • Investors are switching from mutual funds to active ETFs at pace: 92% of investors bought an active ETF in the last 12 months with 46% allocating capital from index mutual funds and 42% allocating capital from active mutual funds. 82% of investors plan to increase or maintain their exposures to active ETFs this year.
  • Crypto, digital asset interest remains in wake of crypto crash: Despite a tumultuous market and rapid decline in value, nearly half of investors still plan to add cryptocurrency and digital asset-themed ETFs to their portfolios this year, at a level roughly in line with 2022.
  • Volatility sparks demand for non-correlated assets: To manage risk and reduce the impact of volatility, 69% of global investors plan to maintain or increase allocations to commodity ETFs, while 76% plan to maintain or increase allocations to buffer/market neutral strategies.
  • Use of proprietary models grows: More than half of investors (57%) prefer utilizing a proprietary model over ETF issuer models when selecting ETFs.

“The macro uncertainty we continue to face has driven investors across type and geography to adapt their portfolios to add protection and capture opportunity. Our survey shows the power and versatility of the ETF toolbox investors now have at their disposal as the industry matures,” said Shawn McNinch, Global Head of ETFs at BBH.

“At its core, the data shows that investors continue to embrace ETFs as a vehicle of choice, with emerging categories such as active and fixed income continuing to gain ground. It also demonstrates that the way investors utilize ETFs is evolving, and asset managers and service providers must constantly adapt to meet these changing demands.”

Read the full report here: www.bbh.com/etfsurvey.

Looking back on a decade of disruption and innovation

Today’s report marks the 10th anniversary of the BBH Global ETF Investor Survey. Since the first survey in 2013, the ETF market has grown 16% annually and changed the face of the asset management industry. ETFs have driven costs for investors down, increased transparency, and improved accessibility.

How investors approach the ETF market has shifted too:

  • Changing lens: Expense ratio, ETF issuer, and tax efficiency – in that order – are the three most important factors for investors when selecting ETFs in 2023. In 2013, the top three, in order, were exposure, ETF brand, and expense ratio.
  • All hail spreads: In 2023, 61% of investors say spreads are extremely or very important when selecting an ETF. By comparison, in 2013, only 2% of investors picked trading spreads as the most important factor when selecting an ETF, and 43% said spreads were the least important factor. This indicates the focus on trading and the impact of spreads to the total cost of ownership of an ETF. 
  • Active has arrived: ETFs are no longer as synonymous with passive investing as they were in 2013. Over the last three years we have seen an impressive 52% annual growth rate bringing the active ETF space to $342bn AUM1.
  • Flight to safety: Today, 46% of investors plan to increase fixed income ETF allocations, versus 11% in 2013. Over the last 10 years, the number of fixed income ETFs to come to market has substantially increased, thus, investors now have more choices.

About Brown Brothers Harriman

BBH is an independent, global financial services firm founded in 1818 and headquartered in New York City. It counts among its clients institutions, privately-held companies, families and wealthy individuals which it serves through its three business lines: Investor Services, Investment Management and Private Banking. The firm is known for its exceptional client service and selectivity.

BBH’s Investor Services business provides cross-border custody, accounting, administration, execution and advanced technology services to many of the world’s leading asset managers and financial institutions. BBH’s Investment Management and Private Banking businesses manage public and private securities portfolios, advise banking clients on strategic direction, provide debt financing and banking services and offer trust and estate services.

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

1 https://www.nyse.com/products/exchange-traded-products/active-semi-transparent/updates/2023-01-12

Brown Brothers Harriman & Co. (“BBH”) may be used to reference the company as a whole and/or its various subsidiaries generally. This material and any products or services may be issued or provided in multiple jurisdictions by duly authorized and regulated subsidiaries. This material is for general information and reference purposes only and does not constitute legal, tax or investment advice and is not intended as an offer to sell, or a solicitation to buy securities, services or investment products. Any reference to tax matters is not intended to be used, and may not be used, for purposes of avoiding penalties under the U.S. Internal Revenue Code, or other applicable tax regimes, or for promotion, marketing or recommendation to third parties. All information has been obtained from sources believed to be reliable, but accuracy is not guaranteed, and reliance should not be placed on the information presented. This material may not be reproduced, copied or transmitted, or any of the content disclosed to third parties, without the permission of BBH. All trademarks and service marks included are the property of BBH or their respective owners. © Brown Brothers Harriman & Co. 2023. All rights reserved. IS-08752-2023-03-21

As of June 15, 2022 Internet Explorer 11 is not supported by BBH.com.

Important Information for Non-U.S. Residents

You are required to read the following important information, which, in conjunction with the Terms and Conditions, governs your use of this website. Your use of this website and its contents constitute your acceptance of this information and those Terms and Conditions. If you do not agree with this information and the Terms and Conditions, you should immediately cease use of this website. The contents of this website have not been prepared for the benefit of investors outside of the United States. This website is not intended as a solicitation of the purchase or sale of any security or other financial instrument or any investment management services for any investor who resides in a jurisdiction other than the United States1. As a general matter, Brown Brothers Harriman & Co. and its subsidiaries (“BBH”) is not licensed or registered to solicit prospective investors and offer investment advisory services in jurisdictions outside of the United States. The information on this website is not intended to be distributed to, directed at or used by any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. Persons in respect of whom such prohibitions apply must not access the website.  Under certain circumstances, BBH may provide services to investors located outside of the United States in accordance with applicable law. The conditions under which such services may be provided will be analyzed on a case-by-case basis by BBH. BBH will only accept investors from such jurisdictions or countries where it has made a determination that such an arrangement or relationship is permissible under the laws of that jurisdiction or country. The existence of this website is not intended to be a substitute for the type of analysis described above and is not intended as a solicitation of or recommendation to any prospective investor, including those located outside of the United States. Certain BBH products or services may not be available in certain jurisdictions. By choosing to access this website from any location other than the United States, you accept full responsibility for compliance with all local laws. The website contains content that has been obtained from sources that BBH believes to be reliable as of the date presented; however, BBH cannot guarantee the accuracy of such content, assure its completeness, or warrant that such information will not be changed. The content contained herein is current as of the date of issuance and is subject to change without notice. The website’s content does not constitute investment advice and should not be used as the basis for any investment decision. There is no guarantee that any investment objectives, expectations, targets described in this website or the  performance or profitability of any investment will be achieved. You understand that investing in securities and other financial instruments involves risks that may affect the value of the securities and may result in losses, including the potential loss of the principal invested, and you assume and are able to bear all such risks.  In no event shall BBH or any other affiliated party be liable for any direct, incidental, special, consequential, indirect, lost profits, loss of business or data, or punitive damages arising out of your use of this website. By clicking accept, you confirm that you accept  to the above Important Information along with Terms and Conditions.

 
1BBH sponsors UCITS Funds registered in Luxembourg, in certain jurisdictions. For information on those funds, please see bbhluxembourgfunds.com



captcha image

Type in the word seen on the picture

I am a current investor in another jurisdiction