Ever see a super tanker turn around?
I once spent a long summer lunch hour (OK more like a lunch hour and half) watching a large container ship pull into port, and my best guess is that it is still only half way there. This is the image that came pouring into my head when I read Thao Hua’s article Big Institutions Making their Move to ETFs which appears in Pension and Investments.
After years of growth from retail and smaller institutions, larger institutions (pensions, foundations, endowments) are accounting for more and more of the ETF pie. ETFs offer larger institutions quicker access to investment than separate accounts and their transparency make them at times more attractive than using futures as a derivates approach. The article sites a BGI study that reported a 41% global increase in the number of institutions using ETFs during a year period ending 9/30/08. The article also cites that 5% of the Teacher Retirement System of Texas is currently in ETFs (over $4 billion).
The smaller investors and institutions always seem to move and react faster to any trend; this is a blessing and a curse. But as I stand here waiting for the S.S. Institution to pull into ETF harbor, I can’t help but wonder – what took them so long?