In a recent research report based on a survey interviews with U.S. institutional asset owners on their use of liquid alt ETFs, Greenwich Associates spotted a new trend.
Based on conversations directly with asset owners, Greenwich determined that about 25% of all U.S. institutional allocations go toward alternatives (roughly $5 trillion), and that in investors’ eye liquid alts as having distinct advantages over illiquid counterparts beyond their obvious liquid nature, including transparency and access to investments they might not otherwise have access to, and which help to diversify their portfolios.
According to Andrew McCollum, Managing Director, Greenwich Associates, it’s still the early innings for use of liquid alt ETFs (with about $47 billion in AUM currently assigned to them), which are primarily for tactical purposes at the moment. However, the pattern of their use seems to be mirroring previous ETF uptake in fixed income and equities – and more strategic use of liquid alt ETFs is starting to emerge.