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Active ETFs and Fixed Income to Drive Flows

  • Cerulli Associates have suggested that firms looking to expand into the ETF market should consider focusing on transparent active ETF products, following a report claiming that 91% of ETF issuers have a plan to develop such products. Cerulli associates also believe that ETFs will likely be used to provide access to a wider range of alternative investment exposures such as private equity and real estate.
  • Many ETF providers are expanding their presence in the alternatives market. For example, State Street and Apollo have filed to launch the SPDR SSGA Apollo IG Public and Private Credit ETF, which is the first ETF to hold private credit. Additionally, BlackRock and Partners Group have partnered to launch a multi-private markets models solution, providing access to private equity, credit and real assets in a single portfolio which is not currently available to the US wealth market.
  • Cerulli found that insurance firms seemed to be the most enthusiastic about increasing their allocations to ETFs over the next couple of years, while four fifths of institutional investors already use ETFs with asset class exposure being the main usage.
  • Cerulli expects ETFs to be used to provide access to a broader range of alternative investment exposures and to be used to manage risk with many institutions expected to use ETFs as long term holdings which will also help to reduce costs.

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