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  4. Global ETF Study 2020
  5. Future of ETFs

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Future of ETFs

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

Impact of technological developments on the ETF industry

Q7. What impact do you think technological development, such as automation, artificial intelligence, machine learning and data analytics, will have on the ETF industry? (Multiple answers were allowed) 

Key Take Outs


Professional buyers generally expect technological change to boost the existing advantages of ETFs, with two thirds expecting new technology to lead to reduced management fees and commissions, and nearly half expecting more cost-efficient management structures and broader product ranges from ETF providers to emerge.
 


New technology is also expected to lead to increased market liquidity by a third of respondents, although only 18% expect technology to drive enhanced investment performance.
 


Respondents that do not currently use ETFs are generally less positive about new technology than buyers of ETFs, with nearly a quarter of non users expecting technological change to lead to greater market distortions, compared to 18% of ETF users, while only 12% of non users expect technology to lead to increased ETF assets, compared to 34% of ETF users.
 


Thematic ETFs

Q8. What characteristics, if any, of thematic ETFs attract you the most? (Multiple answers were allowed)

Key Take Outs


Thematic ETFs, which aim to benefit from long-term macroeconomic and structural trends, are a potential growth area for the ETF industry.
 


According to the survey, investors are most attracted by the niche market exposure, simplicity of concept and the potential return from long-term structural trends that thematic funds provide exposure to.
 


Respondents who don’t currently use ETFs were more attracted by the simplicity and potential return of thematic funds, while ETF users prefer the niche market exposure provided.
 


ETF Knowledge

Q9. What level of knowledge do you think your clients have about different types of ETF? (Scale 0-5; 0 = no knowledge and 5 = very knowledgeable; not knowledgeable % is total of 0, 1 and 2 scores)

Key Take Outs


Respondents said that their clients have a relatively high level of knowledge of active equity ETFs (43% of respondents think that their clients are very knowledgeable).
 


In contrast, just 8% of respondents think that their clients are very knowledgeable about active alternative ETFs.
 


Regionally, Asia Pacific respondents appear to have the most knowledgeable clients across most types of ETF, while Latin American respondents have clients with particularly low levels of knowledge of alternative strategic beta and active alternative ETFs.
 


Future ETF Interest

Q10. Which of the following types of ETF do you think your clients will be interested in over the next two to three years? (scale 0-5; 0 = not interested, 5 = very interested; % interested score is total of 4s and 5s)

Key Take Outs


The highest percentage of respondents (49%) think that their clients will be interested in investing in active equity ETFs over the next two to three years, which also corresponds to a relatively high level of perceived client knowledge in active equity ETFs (see question 9).
 


Thematic ETFs, and ETFs with an environmental, social and governance (ESG) focus, are expected by respondents to receive a relatively high level interest from their clients, in line with growing client knowledge shown in question 9.
 


Respondents generally think that their clients will have a relatively low level of future interest in alternative strategic beta, fixed income strategic beta and active alternative ETFs-again reflected low levels of client knowledge recorded in question 9.
 

Full report

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

Download the full report

ETF allocations

Professional buyers expect their ETF allocations to continue to increase, with passive, growth-oriented strategies the most popular.

Key findings - part 1

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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