Greenwich Associates ETF research

Find out why institutions in Latin America and around the world are turning to ETFs to solve investing challenges across asset classes

ETFs play an expanding role in Latin American portfolios

The results of the 2nd annual Greenwich Associates Latin America ETF Study point to continued growth in institutional ETF investment for 2018 and into 2019 as institutional investors are stepping up their allocations and applying ETFs to new asset classes and functions.

Five trends driving ETF demand*

  1. International diversification: As growing numbers of institutions are using ETFs domiciled in the United States, Ireland and continental Europe, demand for international exposure will remain one of the biggest drivers of ETF demand in the coming year.
  2. Efficient (and cheap) Beta exposures: Latin American institutions are adopting ETFs as a core source of beta exposure alongside index mutual funds and derivatives, as well as key components of active management strategies.
  3. Expanding portfolio functions: Investors are capitalizing on ETFs’ flexibility by applying them in a growing number of asset classes and portfolio functions. Allocations to factor-based/smart beta ETFs are on the rise, and investors are increasingly using ETFs to meet specific environmental, social and governance (ESG) mandates.
  4. Broadening use of fixed-income ETFs: Growing numbers of investors are using fixed-income ETFs to diversify away from local or regional exposures to international fixed income. 45% of current investors plan to increase allocations in the coming year.
  5. Innovation and product development: The worldwide boom in multi-asset strategies is stoking demand for ETFs among Latin American asset managers, many of which use ETFs as basic building blocks of their multi-strategy funds.
  6. Increased adoption of UCITS ETFs: For Latin American institutions, the UCITS ETF platform offers flexibility, improved portfolio and tax efficiency, and innovative, low-cost core options.

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