Greenwich Associates
Latin America ETF Research

Find out why institutions across Latin America are turning to ETFs to seek opportunities and solve investing challenges across asset classes.

Methodology

Greenwich Associates interviewed 50 Latin American institutional investors for its 2016 Latin American study – the debut edition in this region of a global research program. The research sample for Latin America was composed of 19 asset managers, 17 institutional funds, and 14 insurers.

Thirty-six percent of study participants are located in Mexico and about a third in Brazil, with the remainder divided among Colombia, Peru and Chile. Nearly 40% of the institutions in the study have assets under management of $5 billion or more.

ETFs as versatile tools for institutional portfolios

The results of the 1st Annual Greenwich Associates Latin America ETF Research point to ETFs’ growing importance within institutions’ portfolio management toolkits as existing users broaden usage across asset classes to take advantage of the versatility and efficiency they can bring to their portfolios.

Five Trends Driving ETF Demand*

  1. Institutions are experimenting with new and innovative ETF fund structures to help them tackle challenges in their portfolios
    More than 50% of institutions ETF investors invest in smart beta ETFs, and half of these plan to increase allocations within the next 12 months. Demand appears strongest for smart beta ETFs that help manage volatility.
  2. Current impediments to investment will give way as institutions gain experience with ETFs
    Factors such as internal investment guidelines and concerns about ETF liquidity and expenses have initially slowed the adoption of ETFs in other markets. These factors have eased over time as institutions saw early adopters using them safely and effectively.
  3. ETFs are being viewed as a new class of financial instrument
    Nearly 60% of institutions that use derivatives have replaced an existing derivative position with an ETF in the past year.
  4. Demand for ETFs is being fueled by the growth in multi-asset funds
    Approximately 40% of Latin American asset managers that invest in ETFs are using them in multi-asset funds and are investing 14% of total assets in ETFs.
  5. UCITS ETFs will provide new opportunities for investment
    Investors are beginning to initiate their first UCITS trades and are pleased by their benefits, including tax and operational efficiencies. As institutions become more familiar with ETFs and seek new ways to employ them, UCITS will become a larger part of the Latin American investment universe.

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