Influence of the growing ETF industry on active investor relations work16 Introduction to the topic 1 Introduction to the topic Will investor relations IR still be needed in the future in view of the increasing influence of the passive investment industry For years active investments were the focus of investors and pas sive investment opportunities were only seen as a niche product However passive investments have developed to one of the most asked investment opportunities over the last years Exchange traded funds ETFs were already introduced to the capi tal markets as a passive investment type as early as around 1990 and have gone through a devel opment of steadily increasing importance ever since Especially in recent years this fast grow ing trend accelerated significantly also in Europe This growth was also reflected in an increase of passive investments by 25 3 in 2019 Hall et al 2020 p 7 whereas the y o y growth of actively managed assets under management AUM was at 12 5 Hall et al 2020 p 37 Overall passive investments made up 20 of equity markets worldwide in 2019 and in the US its country of ori gin even 30 At the beginning of 2019 AUM of ETFs worldwide exceeded the benchmark of US 5tn Today it is assumed that listed companies in the US are included in at least one ETF Yin and Barientos 2019 Despite this enormous growth and increase in importance the passive investment industry plays only a subordinate role in the day to day work of IR professionals So far just a small proportion of IR work is devoted to tasks relating to the passive investment industry Nonetheless the passive investment industry could also leave a noticeable impact here especially in certain IR task areas If more and more shareholders invest their money passively the classic targeting of active investors which is one of the main tasks of IR might not be necessary any longer This leads to the question of whether IR will still be needed as a communica tion tool to the company s potential and existing shareholders or if it will become superfluous 1 1 Problem description The rapidly rising ETF industry is known through out the capital markets and beyond Nevertheless its impact on investor relations has hardly been researched yet ETFs however could have broader implications for investor relations as tasks like tra ditional investor targeting could become superflu ous Therefore research on possible influences is relevant not only for the investor relations area but for listed companies in general as changes in investment allocations on the capital market can affect the whole company 1 2 Research question The aim of this thesis is to find out whether IR will be impacted by the growing passive investment industry or if the increase of ETFs will not influence the future of IR If the former is the case the ques tion how severe this impact might be will be ana lyzed It will be examined which areas of IR will be particularly and mostly affected by the passive investment industry Furthermore if and to what extent investor relations can prepare themselves for this potentially disruptive change in invest ment allocation and if IR work itself will even be relevant in some years are further research ques tions arising from the research topic Will IR be influenced by the increasing passive investment industry How severe will this impact be Which task areas will be mostly affected How can IR prepare itself for this impact Will IR become superfluous considering the increasing ETF industry 1 3 Research methodology Since the impact on IR has hardly been researched yet primary data is used A questionnaire as the main methodological step sent out to IR profes sionals is the main data source of the empirical study It is used to obtain a dataset on the senti ment of IR experts regarding the future of IR work related to the passive investment industry In addi

Vorschau DIRK-Forschungsreihe Band 28: Influence of the growing ETF industry on active investor relations work Seite 16
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