More investors using ETFs as long-term strategy

"As ETF product offerings broaden, institutions are also employing ETFs for additional tactical positions based on market views to gain timely exposures to specific sectors, such as commodities," the report adds. "Institutions are also using ETFs for longer-term strategic allocations as a cost-efficient diversified core holding to obtain access to a certain asset class that may be less accessible to some investors, such as frontier markets or agricultural investments."

Among the reasons for which consultants "often" or "sometimes" recommend the use of ETFs in institutional portfolios, the Cerulli report cites the following:

• Liquidity purposes (75 percent);
• Source of cheap beta/cost-efficient diversified core holding (46 percent);
• Garner alternatives, commodities, currency options (43 percent);
• Hedge/short market exposure (27 percent);
• Implement a thematic approach (i.e., gain exposure to an asset class, such as emerging markets);
• Sector-specific exposure (e.g., health care or technology); and
• Single-country exposure (e.g., China or Brazil).