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Comparing ETFs and Futures

Efficient execution of portfolio exposures - top papers

A key issue for asset allocators and portfolio managers is determining the most efficient way of implementing a desired exposure. For instance, is it better to use index futures, will it be more effective to buy the underlying stocks, or do low-cost ETFs provide a cheaper solution?

With roll dates for many equity index futures fast approaching, now is a good time to examine the alternatives. A new paper from State Street Global Advisors, below, compares the trade-off between using ETFs versus futures, whilst a recent study from Greenwich Associates examines the versatility offered by ETFs.

Savvy Investor

ETFs: Valuable Versatility in a Newly Volatile Market (Greenwich Assoc, 2018)
(For compliance reasons, this paper is only accessible in the United States)
The Greenwich Associates 2017 U.S. ETF Study looking at institutions preparing for volatility's return and a rising interest rate environment. Alongside these concerns is an increase in ETFs and complex portfolio applications.

Comparing ETFs and Futures for a Fully Funded Investor (State Street Global Advisors, 2018)
(For compliance reasons, this paper is only accessible in certain geographies)
This paper presents a comparison between ETFs and futures and breaks down the differentiating factors that are driving investors' interest towards ETFs.

How regulations and taxes are shaping the future of ETFs (PwC, 2018)
The increasing popularity of ETFs has brought with it an increase in regulatory scrutiny, as the number and types of ETF products has rapidly expanded. This PwC survey highlights current regulatory concerns for the ETF market.

ETF Execution Strategies (2018 Guide to ETFs and Derivatives, BlackRock)
(For compliance reasons, this paper is only accessible in the United States)
In the 2018 Guide to ETFs and Derivatives, BlackRock considers how to select an appropriate execution strategy, examines the pricing mechanics of ETFs, the multiple layers of ETF liquidity and the different methods of executing ETF trades.

BlackRock’s 2018 Guide to ETFs and Derivatives
(For compliance reasons, this paper is only accessible in the United States)
ETFs are assuming a more prominent role alongside derivatives, as institutional investors increasingly opt to either replace or to compliment their derivative positions due to efficiency, lower costs, and other benefits.

The Big Picture: A Cost Comparison of Futures and ETFs (2016)
This report by the CME Group provides investors with helpful comparisons of the cost of Futures and ETFs. 

Bond ETFs and Credit Derivatives (2018 Guide to ETFs and Derivatives, BlackRock)
(For compliance reasons, this paper is only accessible in the United States)
In the 2018 Guide to ETFs and Derivatives, BlackRock addresses how investors can quickly put cash to work, gain market exposure, hedge portfolios, and seek to generate alpha through tactical asset allocation.

Inefficiencies in the Pricing of ETFs (Financial Analysts Journal, 2017)
This paper examines ETF pricing inefficiencies, as ETF prices can deviate substantially from their NAVs. These deviations could be due to holdings of international or illiquid securities.

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