Approximately 50 per cent of US institutional users in the Greenwich Associates study say they employ ETFs for what they consider as ‘tactical’ tasks related to the management of their portfolios; approximately 20 per cent of institutional ETF users say they employ the funds to implement ‘strategic or long-term’ investment decisions, and an equal share report that they use ETFs for both tactical and strategic purposes. More than half of all US institutions that already use ETFs expect their usage to increase in the next three years, with asset managers being the fastest movers.

They reportedly expect to devote more assets to ETFs in the next 12 months. The Greenwich Associates study also showed that ETFs are used for both active and passive exposure. Employer funds most commonly use ETFs for two purposes – tactical portfolio adjustment and gaining market exposure during transitions, while the most common use of ETFs among money managers is cash equitisation. In Australia we still expect recent sharp growth in trading and interest in the products to continue to outpace BlackRock’s projected global ETF market growth of 25-30 per cent over the next five years.