Asset Management - July 23, 2008

EDHEC European ETF Survey 2008

An article based on this survey was published in the Journal of Alternative Investments, Summer 2009.

The EDHEC European ETF Survey 2008 is part of the EDHEC Risk and Asset Management Research Centre’s Indices and Benchmarking research programme. This programme has led to extensive research on indices and benchmarks in both the hedge fund universe and the more traditional investment classes. In 2006, EDHEC published a study of the quality of major stock market indices. Following up on this study, EDHEC is carrying out work that assesses the advantages and disadvantages of various new forms of equity indices.

In view of the growth and development of ETFs in Europe, and in view of their growing popularity as investment media for both index management and the construction of benchmarks, it is only natural that EDHEC should devote significant resources to research into ETFs. In 2006, with the support of iShares, we published the first EDHEC European ETF survey. The present survey, an update and extension of the 2006 survey, sheds light on recent developments and trends in ETF investing.

The survey is divided into two parts. The first part examines the current use of ETFs, as revealed by answers to our questionnaire. Overall, the results suggest that European investors and asset managers are well aware of the advantages of ETFs. Moreover, this awareness has grown in recent years. However, we also find that the full potential of these instruments for asset allocation is not currently being exploited by the majority of investment management professionals.

The second part complements the survey results by discussing advanced techniques involving dynamic allocation strategies carried out with ETFs. In particular, the second part shows how ETFs can be used in a dynamic risk management context and analyses the benefits of this approach.

The EDHEC European ETF Survey 2008 was produced with the support of iShares.

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