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European pensions to flock to ETFs
14 March 2013
Pension funds across the region aim to increase their exposure to ETFs over the next 12 months, particularly emerging market vehicles
More than a third (38%) of European pension funds aim to increase their investment in exchange traded funds (ETFs) over the next 12 months, according to new research by FinEx ETF.
The research, which was carried out in an online survey in December last year, also showed that 34% of UK pension funds plan to growth their investment in ETFs over the same timeframe.
When questioned about their three-year plans, 42% of European pension funds said they would likely increase their ETF investments. The majority of respondents (43%) noted efficiency as the most important attribute of ETFs, followed by diversification (27%) and liquidity (24%).
Nearly a third (32%) said these investment vehicles are an effective way to have exposure to emerging market (EM) corporate debt and 74% said institutional investors will increase their exposure to this asset class over the next 12 months. Nearly 50% invest in EM high yield debt and over the next five years 32% said they expect institutional investors to increase their exposure to Russian corporate debt.
The research also showed that 38% of UK pension funds invest in EM high yield corporate debt.
According to FinEx, the weekly average inflow of EM bond ETFs has increased by around 39% over the past five years.