10 Nov 2017 Are European investors ready for Alternative ETFs?
Long only index ETFs and Smart Beta factor ETFs are a success story with investors. Looking forward, Alternative ETFs with long and short exposures to different asset classes might seem like a very natural next step for the ETF industry. Especially Alternative Risk Premia strategies that follow pure quantitative rules could be well suited to wrap in an ETF format.
Amundi just launched an equity market-neutral ETF that started trading Tuesday 07/11 on Euronext Paris. Also JP Morgan announced the launch later this year of 2 Alternative ETFs, following a rules based investment approach to capture different long/short risk premia. All of these are UCITS compliant (and taken up in the LuxHedge Alternative UCITS universe).
In a recent opinion piece, Detlef Glow from ThomsonReuters is assessing whether Hedge Fund strategies wrapped as ETFs will become popular with investors. While it seems like a logical next step, the high complexity of these strategies requires a greater effort by the sales forces of ETF promoters. Also, with hedge fund strategies offering a lower liquidity and Alternative UCITS generally offering a daily liquidity, wider bid/offer spreads on Alternative ETFs could be a concern as well.
With reference to: Lipper Alpha Insight