MiFID II sees “more asset managers buying ETFs”

Invesco PowerShares said it has seen more asset managers and hedge funds buying exchange-traded funds (ETFs) since January’s change to capital market regulations.

Although a figure was not given, the rise in sales was described as “very significant”.

Jürgen Blumberg, head of capital markets for Europe, Middle East and Africa at the firm, said the revised Markets in Financial Instruments Directive (MiFID II) was driving strong growth in ETFs due to the higher levels of reporting and market information required under the regulations.

He said this had eliminated concerns about transparency and pricing that institutional investors had held about the ETF market.

“In the first months post-MiFID II implementation, Invesco PowerShares itself has seen a significant increase in reported [trade] from key clients such as asset managers and hedge funds,” said Blumberg.

An Invesco PowerShares-sponsored survey of 57 institutional and sophisticated investors found that over two-thirds of respondents thought MiFID II would result in increased use of ETFs by institutions in Europe – and 63% said assets held in Europe’s ETF market could top $1 trillion (€817 billion) this year due to the directive.

Pension funds were viewed by 61% of respondents as the most likely investor type to switch to ETFs in the wake of MiFID II, followed by insurance companies, collective investments funds, and hedge funds.

Low costs and management fees were the top reason given for the expected increase.

©2018 funds europe

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