Many niche asset classes can be difficult to access via a mandate. This is where the breadth of exchange traded funds (ETFs) on offer can be advantageous, with thousands of indexes available globally -from UK equities to commodities. ETFs have therefore opened up niche asset classes that were previously difficult to reach and therefore uninvestable. Today, investors can simply buy an ETF providing exposure to the asset class in a transparent and easy to use way.
At the end of December 2018, there were 7,199 exchange traded products (ETPs -which include ETFs and exchange traded notes), available globally3, providing exposure to almost every asset class an institutional investor could want. Beyond the core exposures to major indices, investors can use ETFs to access sectors and sub-sectors, thematics, commodities and more.
The ability to quickly take a position in virtually any investable asset class or market segment has proved to be one of the most attractive features of ETFs.
Further, asset class segments such as emerging market bonds and smart beta are not widely available in pooled index funds and futures contracts are largely non-existent. For investors looking for the efficiency of a pooled fund, ETFs can be the best option available to them.