Futures Are Still on a Roll With the Buy-Side

The overall strength of U.S. equity markets has continued to influence the use of futures and ETFs by investors seeking to replicate index returns. Over the course of 2018, the S&P 500 has been on a tumultuous ride, soaring to new highs before giving back gains. 

Futures and ETFs linked to the index have grown in popularity and continue to be commonly used by global investors looking to gain exposure using passive replication strategies as well as active managers seeking to take advantage of volatility in the market

The purpose of this white paper is to learn how portfolio managers and traders perform the cost-benefit analysis when deciding between futures and ETFs for index replication. While futures have generally been the de facto instrument for gaining exposure, particularly for investors using leverage, increases in ETFs’ AUM and liquidity have expanded investor opportunity sets.