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  4. Global ETF Study 2020
  5. ETF trading and investing

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ETF trading and investing

Investors enjoy the low costs and trading flexibility of ETFs, but view liquidity as a risk. Market volume is the leading trading consideration.

Most important factors when trading ETFs

Q4. What factors do you consider, or would you consider, when trading ETFs? (Multiple answers were allowed)

Key Take Outs


Three quarters of respondents consider market volume when trading ETFs, while bid-ask spreads are also an important factor.
 


Almost all of US respondents take market volume into consideration when trading ETFs, while in EMEA, bid-ask spreads, collateralisation of ETFs and securities lending are more important considerations than in other regions.
 


Market impact is a more important consideration for Asia Pacific and US investors when trading ETFs.
 


Biggest risks when investing in ETFs

Q5. What do you see as the biggest threats/risks of investing in ETFs? (Multiple answers were allowed)

Key Take Outs


Perhaps because respondents see the enhanced levels of liquidity provided as a key reason to use ETFs, they are also highly sensitive to any threats to ETF liquidity, with two thirds of professional buyers citing liquidity issues under a major bear market as a big risk of investing in ETFs.
 


Some investors may have worries that that recent changes to market liquidity, such as the greater use of automated trading systems and the rise of high-frequency trading, have increased liquidity risks during periods of market stress. Liquidity concerns may also explain why investors are focused on market volume and bid-ask spreads when trading ETFs (see question 4).
 


The risk of market distortion is also a concern for four out of ten respondents, and half of US respondents.
 


ETF advantages

Q6. What do you see as the biggest advantages of investing in ETFs? (Multiple answers were allowed)


Key Take Outs


Fees/costs, trading flexibility and transparency are the top three advantages of investing in ETFs according to respondents to the survey.
 


US respondents give increased weight to cost, trading flexibility and solution-based products compared to respondents from other regions.
 


Just under a quarter of respondents feel that ETFs help them make a general shift to passive investing, while just under a fifth said that the constant innovation in ETF products was an advantage.
 

Full report

Download the full report to see all the data and analysis from this year's survey.

Download the full report

Future of ETFs

Knowledge of different types of ETFs among clients of professional buyers is limited, with implications for future buying intentions.

Key findings - part 3

This is a marketing communication and as such the views contained herein are not to be taken as an advice or recommendation to buy or sell any investment or interest thereto. Reliance upon information in this material is at the sole discretion of the reader. Any research in this document has been obtained and may have been acted upon by J.P. Morgan Asset Management for its own purpose. The results of such research are being made available as additional information and do not necessarily reflect the views of J.P. Morgan Asset Management. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are, unless otherwise stated, J.P. Morgan Asset Management’s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all inclusive and are not guaranteed as to accuracy. They may be subject to change without reference or notification to you. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and investors may not get back the full amount invested. Past performance and yield are not a reliable indicator of current and future results. There is no guarantee that any forecast made will come to pass. J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. To the extent permitted by applicable law, we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies. Personal data will be collected, stored and processed by J.P. Morgan Asset Management in accordance with our EMEA Privacy Policy www.jpmorgan.com/emea-privacy-policy.
 

This communication is issued in Europe (excluding UK) by JPMorgan Asset Management (Europe) S.à r.l., 6 route de Trèves, L-2633 Senningerberg, Grand Duchy of Luxembourg, R.C.S. Luxembourg B27900, corporate capital EUR 10.000.000.

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