(Bloomberg) -- The booming demand for hot exchange-traded funds has finally caught up with the staid, sleepy insurance industry.
U.S. insurers are the latest group of investors to start buying ETFs en masse, with one of the fastest adoption rates among institutions. And they’re not done yet, according to JPMorgan Chase & Co.’s Mark Snyder, who helps oversee funds for the industry. Insurance companies are holding an estimated $200 billion in cash and another $80 billion in equities that could be reallocated, he said, and by shifting some of their portfolios about $25 billion to $50 billion could flow into ETFs.
|Looking at ways to evolve
“It’s pretty clear that it is an area of pretty dramatic growth,” said Josh Penzner, head of BlackRock Inc.’s iShares fixed-income and insurance sales. “Insurers, they’re not quick to change, however they’re really looking at their investment processes and looking at ways they can evolve.”
As ETFs have grown from small niche products targeted at retail investors to market behemoths held by hedge funds, pension funds and other sophisticated institutions, insurers have been slow to take them on.
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