ETFs: your flexible funds

Recessionary markets have been historically positive for ETFs, though IFAs remain reluctant to recommend them to retail clients. However, experts point to their flexibility in tumultuous times and argue that an increased focus on risk and accountability could force many advisers to change their business models, which may pave the way for ETF growth

ETFs have historically enjoyed considerable growth during market downturns. The relative attractiveness of cheap, liquid and transparent indexation strategies has been particularly clear in volatile and illiquid markets. Increased cross-asset-class correlation in falling markets has added to their appeal. As the global economy heads into another recession and active managers increasingly underperform, ETFs look well placed to benefit as institutional investors, discretionary managers and private investors have become increasingly attracted by their flexibility. But, despite all of ETFs'...