SCANDINAVIA - Scandinavian pension funds are amongst the top investors in exchange traded funds (ETFs), according to Deutsche Bank.
He said: "We have seen some large pension funds in the region investing medium term asset allocations in a number of our ETFs, especially emerging markets."
db x-trackers listed across five major European markets during 2007 and launched 49 products, raising a total of €7.5bn (US$11.1bn) in assets. Mistry said more than 90% of assets under management had come from institutional money.
"We have seen the full spectrum from small pension funds to larger schemes. The size of assets invested varies, but as an indication, in the first four weeks of 2008, db x-trackers raised €1.1bn of investment," said Mistry.
db x-trackers plans to launch 40 products over the next month to expand its offering to almost 90 products.
"We are excited about these new launches as it will give pension funds the tools to access even more niche markets which they would traditionally find difficult to invest in directly.
"A lot of clients do not have the knowledge or expertise to invest in specific areas such as emerging markets, commodities or infrastructure and ETFs provide them with a good low cost way to do this," said Mistry.
Mistry said pension funds were using ETFs in a number of ways from short to long term. In the short term, to 'equitise' any cash they had in a portfolio, and in the long term, as part of a tactical asset allocation strategy, where ETFs could be used both as core and satellite investments within the strategy.
"ETFs provide an alternative to derivatives and can be used as a substitute for futures or swaps, because they are a regulated investment that trades on the stock exchange. We created the first short ETF, so investors had a tool to go short without using derivatives to take a directional view," added Mistry.
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