Attracted by exchange-traded funds’ transparency, liquidity and low fees, more institutional investors turned to these instruments during the crisis, Barclays Global Investors said in a report based on Thomson Reuters data.
Since 1997, the number of institutions investing in ETFs has risen 1,673% at an annual compound growth rate of 30%. Last year, ETFs took in $270 billion, while long-term mutual funds lost $117 billion. Retail and institutional fund managers make up 73.5% of the ETF customer base, followed by hedge funds, which comprise 15%. However, hedge funds’ use of ETFs grew at an annual compound growth rate of 42% in that time.