Exploring the Future of ETFs: Insights from MSCI's First Survey

In mid-September, MSCI launched its first-ever ETF Intelligence Survey, shedding light on current trends in the ETF market. Paul Riccardella, a financial expert at MSCI, shared valuable insights during a discussion with ETF.com's Sumit Roy at the Future Proof event.

Understanding the Survey's Purpose

The survey aimed to capture perspectives from 450 wealth managers and professional ETF investors regarding the expanding ETF market, which now boasts an impressive 5,500 ETFs in the U.S. alone. Interestingly, active ETFs have started to outnumber indexed ETFs, prompting MSCI to delve into the priorities and aspirations of these industry professionals.

Key Discoveries from the Survey

Riccardella highlighted several significant findings:

• Rising Interest in Active ETFs: The survey uncovered a strong surge in interest for active ETFs, particularly those focusing on thematic investments and emerging markets.
• Brand Loyalty Among Advisors: About 58% of respondents indicated a preference for converting their mutual fund strategies into ETFs. However, they also expressed a willingness to shift to other active ETFs from the same manager if their desired options weren't available.

This trend underscores an essential opportunity for active managers to transition their strategies into more popular ETF formats, meeting the increased demand.

Advisors' Views on Private Markets

An intriguing aspect of the survey was the interest among advisors in accessing private markets through ETFs. However, this interest is tempered by a degree of skepticism due to the inherent illiquidity of private assets compared to the liquidity typically associated with ETFs.

Riccardella noted that while MSCI has developed robust solutions to model private capital within public structures, the mismatch remains a concern for many in the wealth management and ETF evaluation sectors. Advisors are well aware of the challenges involved in marrying private investments with public trading platforms.

Looking Ahead

As the ETF landscape continues to evolve, MSCI's findings provide a clear snapshot of where the market may be headed. With a growing preference for active ETFs and a keen interest in thematic exposure, the insights from this survey will likely influence product development and strategic planning in the ETF market.

Overall, the survey underscores the dynamic nature of ETFs and the increasing sophistication of investor needs, setting the stage for exciting developments in the years to come.