ETFs have been a key area of interest for both retail and institutional investors in the first half of 2020. Following years of sustained growth, their long-term viability has been tested since the beginning of the COVID-19 pandemic and the results have been overwhelmingly positive.
Alex Craddock, managing director and Global CMO of iShares, believes that marketing ETFs in the current climate is primarily about offering resources that speak to investor needs and concerns. In a recent webinar with the Financial Communications Society, Craddock shared some of the key ETF themes that are emerging as a result of the COVID-19 pandemic.
- Fixed-income ETFs are among the best-performing asset classes of 2020 and are likely to see increased interest from investors in the coming months.
- Leveraging client insights and data can have a big impact on the ability to adapt to shifting consumer needs and pivot messaging during uncertain times.
- Due to iShares’ agility over the past few months, the brand has been able to successfully engage with clients at both the retail and institutional levels by providing relevant content and resources related to the current market shifts.
The Importance of Leveraging Client Insights
Financial firms have become increasingly data-driven in the past few years and the ability to leverage client insights has helped companies like iShares navigate the current crisis. “One of the things that stood us in good stead was the shift that we made in the last 18 months to being a lot more focused on client insights and data and using that to get a deep understanding of what our clients are feeling, what they’re looking for, and what their needs are,” says Craddock. As a result, iShares has been able to pivot their campaigns and messaging quickly, offering investors the reassurance and resources they’ve been seeking over the past few months.
“It was a wild ride but the agility we showed and the ability to get great content out there and help people to make some sense of the chaos was reassuring and that’s been very much the theme that we’ve seen over the last three to four months now,” explains Craddock. Moving forward, iShares plans to continue to stay close to their clients by consistently putting their insights to use in their marketing campaigns.
The Outlook for Fixed-Income ETFs
Fixed-income ETFs have seen remarkable inflows this year despite ongoing volatility, with ETF.com reporting that they have pulled in more than $74 billion of cash in 2020. Part of that has to be attributed to the Federal Reserve’s involvement in the bond market as part of its efforts to stabilize financial markets. But Craddock believes this is also a direct result of strong performance, and a trend that will continue in the coming months. “Up until now, there has been commentary in the industry around fixed-income ETFs and whether they could perform well in a volatile market, and I have to say that if ever there has been a test of fixed-income ETFs, it’s been in the last three to four months with the markets that we’ve experienced.”
That test has resulted in the emergence of fixed-income ETFs as a safe haven for many investors and a powerful asset class for iShares. “Our fixed income ETFs performed exactly as we expected and hoped—the liquidity was there, the price transparency was there, and what we’ve seen as a result has been a lot of commentary now from within the industry about just how well fixed-income ETFs have performed and that has made it an even bigger opportunity than it was at the start of the year.”
The Bottom Line
ETFs are proving their value in the current climate and investor interest is likely to increase over the coming months. Offering investors the resources they need to make the right investment decisions can go a long way toward great long-lasting client relationships.