Shifts in Bond Markets and Rates Drive Institutional Usage of Fixed Income ETFs, According to Report

First fixed income ETF survey by Apex Equities reports vast majority of institutions use ETFs for ease of use and liquidity


Hong Kong, China -- (SBWIRE) -- 09/30/2015 -- Institutions quickly embracing fixed income ETFs for long-term strategic exposures

Institutional investors are using fixed income exchange traded funds (ETFs) as they adjust their portfolios to adapt to post-financial crisis regulatory changes and rising interest rates, according to a new report, Institutional Investors Turning to Fixed-Income ETFs in Evolving Bond Market, from Apex Equities.

Changes to fixed income portfolios of corporate and public pensions, foundations and endowments, investment managers, large registered investment advisors, and insurance companies are revealed in the first fixed income ETF study by Apex Equities.

The current and expected future use of fixed income ETFs with the backdrop of a changing bond market indicate strong growth of fixed income ETFs. A large percentage of current users (85%) have employed fixed income ETFs for at least two years and 66% of users have increased their usage since 2011.

Other key findings in the research are: 1) around 80% of institutions surveyed use fixed income ETFs for ease of use and liquidity to help them access bonds in the post-financial crisis bond market; 2) nearly 50% of institutions have quickly progressed their use of fixed income ETFs from tactical to strategic; and 3) out of the non-users who plan to use fixed income ETFs in the coming year, 67% plan to allocate 6-10% of their fixed income portfolio to ETFs.

Top Reasons for Using Fixed Income ETFs – Ease of Use and Liquidity

Institutions report ease of use and liquidity as the main reasons to use fixed income ETFs, 81% and 80% respectively. The impact of post-crisis regulatory changes is challenging institutions to reposition their portfolios.

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