Fund managers demand more education for ETF investing

The growth rate in the European ETF market outstripped the US for the first time.

By Joe Parsons

Fund managers and investors want more education around new exchange-traded fund (ETF) products before increasing their exposure, according to a survey by Brown Brothers Harriman (BBH).

According to the survey of 283 financial advisors, fund managers and institutional investors across Europe, around  one-quarter cited ‘not fully understanding ETFs’ as one of the reasons they have not increased exposure.

Meanwhile, 60% of respondents felt they needed greater education over new launches, and almost half said they did not know where liquid alternatives would fit into their portfolio.

“Those asset managers who are able and willing to provide more in-depth ETF education to investors have a growing opportunity to add assets from existing customers, and cultivate new ones,” said Andrew Craswell, senior vice president, BBH ETF services.

“As investors continue to move towards lower cost investment strategies, so too are they calling for increased guidance and education, particularly around new ETF products and the associated strategies, which are becoming increasingly complex. European asset managers should grasp this opportunity.” 

The survey also found 76% of European ETF investors cite environmental, social and governance (ESG) factors as ‘somewhat or very important’ when making investment decisions, while only 51% of US investors said in the same in BBH’s survey last year.

Furthermore, while the size of the ETF market in the US dwarfs the European market, the 40% growth rate in Europe exceeded the US growth of 34%, the first time this has occurred.