Nordic ETF Trends 2017

The Nordic ETF Trends 2017 supplement provides a comprehensive overview of the growing prominence and evolving usage of Exchange-Traded Funds (ETFs) in the Nordic region. Predominantly driven by institutional investors, ETFs remain primarily a tactical investment tool, although a shift toward strategic positioning is emerging. Key trends from the year include continued interest in factor investing and fixed income ETFs, with institutions increasingly favoring ETFs over derivatives due to improved liquidity, reduced costs, and regulatory changes such as MiFID II fostering transparency and retail market growth. Additionally, the rise of robo-advisors in the Nordics signals a transformation in retail access to ETFs, promising enhanced guidance and adoption in the mass-affluent segment, often facilitated by established financial institutions leveraging new digital platforms.

A significant theme discussed in an industry roundtable featuring representatives from BlackRock/iShares, Deutsche Asset Management, Lyxor ETF, and Vanguard centers on the ETF product landscape, market challenges, and strategic growth opportunities. While product proliferation has introduced numerous niche and sometimes illiquid offerings, the focus remains on core products that provide cost-effective, liquid, and diversified exposure. The roundtable emphasized the importance of ESG (Environmental, Social, and Governance) integration within ETFs, noting its rising influence among institutional investors and the potential for ETFs to support responsible investing through evolving indices and factor considerations. Despite concerns about liquidity and market risks, ETFs are viewed as robust investment vehicles, with innovations enhancing their flexibility and appeal.

Investor insights from Nordic asset managers and pension funds reveal that ETFs are used mainly for tactical asset allocation and portfolio diversification, while broader adoption awaits improvements in cost efficiency, liquidity, and product availability—particularly in the retail sector. The supplement also highlights views on factor investing strategies, advocating for diversified portfolios with strategic factor tilts informed by macroeconomic indicators, valuations, and performance momentum, facilitated through ETFs. Overall, the report underscores ETFs’ expanding role in Nordic asset management, shaped by regulatory shifts, technological advancements, and evolving investor needs toward more transparent, versatile, and sustainable investment solutions.

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Table of content

Introduction to Nordic ETF Trends 2017

An overview of the Nordic ETF market landscape, highlighting investor and product provider insights, with a focus on institutional usage, emerging trends such as factor investing and fixed income, and the anticipated impact of regulatory changes like Mifid II on retail adoption and robo-advisors.

Growth of Robo-Advisors in the Nordic Region

Discussion on the rise of automated investment services, like Betterment, Nordnet’s Robosave, and Avanza Auto, driven by cost transparency from Mifid II and digitalization. The role of established banks and fintech startups in shaping the future of robo-advisors is explored.

European ETF Market Development and Use Cases

Insights into ETF growth in Europe, asset inflows, product offerings, and how ETFs serve both tactical and strategic investment roles. Emphasis on diversification, combining active and passive approaches, liquidity management, and long-term investment strategies using ETFs.

ETF Industry Roundtable – London Discussions

Key themes from a roundtable with BlackRock, Deutsche Asset Management, Lyxor ETF, and Vanguard representatives including continued dominance of factor investing and fixed income, the mix of tactical and strategic ETF usage, challenges of product proliferation, liquidity considerations, and strategies for industry growth and education.

Impact of Mifid II and Fee Transparency

An examination of how new regulations are reshaping distribution models, fostering retail growth, increasing transparency in advisory services, and influencing shifts from retrocessions to fee-based frameworks in the Nordic market.

Strategic vs Tactical Use of ETFs by Institutional Investors

Exploration of institutional investors’ expanding ETF applications, moving from primarily tactical trading to strategic asset allocation, including substituting ETFs for derivatives and addressing valuation and risk concerns amidst market uncertainties.

Role of Robo-Advisors in Retail ETF Access

Insights on how robo-advisors are becoming key intermediaries for retail investors accessing ETFs, highlighting preferences for established brands and partnerships, due diligence on product selection, and anticipated growth of digital advisory platforms.

Future Market Opportunities and Challenges

Discussion on the evolving ETF market with a focus on wealth management channels, local ETF listings, service and client engagement, potential risks related to product diversity and liquidity, and the education needed for market participants.

ESG and Sustainable Investing in ETFs

Assessment of ESG integration in the ETF space, the challenges of varied ESG definitions, growth potential for ESG-themed products, shift from exclusionary approaches to factor tilting, and how ETFs can better serve responsible investors.

Institutional Investor Perspectives from the Nordic Region

Insights from Finnish and Danish institutional investors covering current ETF usage, challenges (such as tax treatment and liquidity), tactical vs strategic roles, cost considerations, and the role of ETFs within broader active and passive portfolio management frameworks.

Expert Commentary on Factor Investing and Factor Tilting

BlackRock’s thought leadership on the cyclical nature of factor premiums, the difficulty of timing factors, and strategy recommendations for diversified factor portfolios with modest tilting based on macroeconomic, valuation, performance, and dispersion indicators.

Contact Information and Publishing Schedule

Details of the editorial and publishing contacts at Tell Media Group along with the 2018 schedule for the Nordic Fund Selection Journal illustrating commitment to ongoing ETF coverage and industry engagement.