Why Institutional Investors Are Digging ETFs

Exchange traded funds (ETFs) are taking the investment world by storm, and it's not just individual investors making good use of them. Large institutional trader also prize the funds for a few reasons. According to recent reports from Greenwich , the ETF industry is getting a firm footing in the institutional market, and they're using tactical strategies to get their exposure. Douglas Appel for Pensions and Investments reports that a recent study indicated that 43 plan sponsors and 27 money managers surveyed March 8-16 cited "tactical adjustments" to gain temporary market exposures and transitions as the primary use of ETFs. [ Why Buy and Hold Is Out. ]

Also, around 14% of U.S. pension funds, endowments and foundations surveyed reported using ETFs as an investment tool. Although this is still a small sample, these institutions happen to account for roughtly half of all ETF assets.

BlackRock was the ETF provider institutional investors turned to most often, with 89% saying they used that company's funds. Interesting, since BlackRock recently announced that its iShares ETFs hit a whopping $500 billion in assets. [ Following Trends in Today's Economy. ]

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.