Investment advisers surpass retail as biggest holders of US-listed ETFs

Investment advisers surpass retail as biggest holders of US-listed ETFs

Investment advisers have eclipsed retail traders to become the largest owners of US exchange traded funds, highlighting how professional investors are increasingly using the vehicles to build portfolios.

Nearly two-fifths of US-listed ETFs by value are now owned by investment advisers, according to research compiled by Citigroup. Five years ago, this figure stood at a little over 35 per cent, the bank’s data show, drawing on quarterly filings made by institutions to detail their US equity holdings.

Wealth managers own 12.7 per cent, with other institutions, such as insurers and pension funds, holding a further 8.8 per cent.

Over the same timeframe, retail ownership of US-listed ETFs has fallen from 40 per cent to 38.9 per cent, according to Citi.

“The pandemic has accelerated institutional adoption of ETFs. Institutional holdings of US-listed ETFs have outpaced broader asset growth over the past year, pushing retail ownership of ETFs under 40 per cent at the end of Q3,” said Scott Chronert, global head of ETF research at Citi.

Chronert said the US Federal Reserve’s decision to buy fixed-income ETFs to help stabilise the markets during last year’s pandemic-driven sell-off was likely to have provided a further tailwind.

“The Federal Reserve incorporated ETFs as a policy tool. To us,