ETFs the hottest point in the investors' list

Institutional investors preferred exchange-traded funds last year because they are easy and convenient to trade and are quite diverse, allowing for more flexible devirification and more adapted risk management.

On average, about 24.8% of these large companies' assets were at the ETF in 2018. A fairly large leap from the previous figure of 18.5% in 2017.

Globally, assets in the ETF are over $ 5 trillion or 6% of the entire stock market. Portfolio managers and investment strategists mainly highlight three reasons for this major move.

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Market turbulence

Companies argue that managing risk and balancing it with yield was their top priority during the market turbulence witnessed by the end of 2018. Trade tensions between the US and China were high and worsened, Brexit negotiations were unstable worries about the Chinese economy have grown. Do not be surprised, though. These factors still affect today.

Accelerated process of diversification

Institutions also prefer ETF tools as a good method of detecting exposures to different stocks or bonds. They mostly prefer them instead of mutual funds.

The wide variety of ETFs

Their use varies from: changing tactics, rebalancing portfolio structures and selecting new major classes of assets. Institutions use them more and more often to get exposures to fixed-income instruments.

However, this transition may be delayed at some point, but very few companies are planning to cut their ETF exposures in 2019. Those who have not yet entered, say they simply do not have the corporate permission to buy them - something that may change, and this will further exacerbate demand for exchange-traded funds.

Source: Business Insider

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