Institutional investors boost ownership of ETFs

Institutional investors increased their ownership of US exchange traded funds by $213bn in 2016 to $1.4tn, accounting for 59 per cent of all ETF assets, according to analysis from Deutsche Bank.

Despite growing by the amount of assets, institutional investors now make up a smaller proportion of the ETF landscape than they did in 2015, as retail ownership grew at a faster pace.

The biggest individual institutional holders of ETFs tend to be large bank’s wealth management divisions, with Morgan Stanley, Wells Fargo, UBS and Bank of America making up four of the top five positions. Bank of America’s investment advisor – under the name Merrill Lynch – sits in the top spot.

Investment advisors have the biggest allocation to fixed income ETFs but still allocate around 75 per cent of their assets to equity ETFs. Big US stock market ETFs tend to have the biggest allocation across institutional investor groups.