Download the ETF Snapshot for free.
How do Institutional Investors Choose ETFs?
Although there are roughly 7,000 ETFs available globally, the majority of assets under management (AUM) belongs to a relatively small number of funds. In fact, among the 100 largest ETFs, the top 20 hold over 50% of the assets.
In this infographic from iShares, we rank the top criteria institutional investors use when selecting an ETF. It’s the last of a five-part series covering key insights from the ETF Snapshot, a comprehensive report on how ETFs are being used.
The Methodology
To assess how institutional investors navigated this volatility, Institutional Investor published a report in 2021 based on a survey of 766 decision makers. Respondents were from various types of organizations, firm sizes, and regions.
For instance, here is how responses broke down by location:
- 21% Asia Pacific
- 36% North America
- 29% Europe, Middle East and Africa
- 14% Latin America
Here’s what the survey found.
The Top Criteria for Picking an ETF
The following table lists the most important criteria institutional investors consider when selecting an ETF.
| Criteria | % of respondents (n=762) |
|---|---|
| AUM, liquidity, and trading volume | 68% |
| Benchmark index used | 53% |
| ETF provider’s brand and market position | 48% |
| Historical performance | 46% |
| Value-added services from ETF provider | 45% |
| Management fee | 34% |
| Transaction cost | 29% |
n=762
The key takeaway is that institutional investors seek large, highly liquid ETFs that are linked to the right benchmark. Perhaps surprisingly, management fees and transaction (Read more...)