ONAt a recent virtual event hosted by Nasdaq, ETF industry experts discussed how companies are embracing the digital revolution accelerated by the coronavirus pandemic, adopting new technologies and using market data in new ways to connect with customers. The panel also highlighted the rise in thematic investments, including several topics that have come to the fore such as cybersecurity, biotechnology and environment, social and governance (ESG), but stressed that educating investors remains vital to healthy markets is.
“The global investment community has become a digital world during the pandemic.” Lauren Dillard, Head of Investment Intelligence at Nasdaq, said during Nasdaq’s recent Virtual Cabana Poolside Chat. “With much of the workforce moving to a remote environment, everything from investment strategies to investor engagement was affected. Customer loyalty must be meaningful, and insights must be actionable and consumable in order to implement the investment thesis. “
During the virtual event, a panel was made up of Dillard, John Molesphini, Global Head of Insights eVestment, a Nasdaq platform, and Dave Nadig, CIO and Director of Research at ETF Trends, moderated by Tom Lydon, CEO of ETF trendsdiscussed how the financial services industry accepts digitization and at the same time recognizes the need for humanization in order to build meaningful partnerships.
“It is the companies that rely on all of the data in this digital world but still have a customer connection that are best placed to take advantage of events to come and what has happened over the past 12 months.” said Molesphini. “It has an internal infrastructure to use the data when it is available and through the distribution network. That way, you can communicate more effectively with customers or adapt the sales network to some of the trends you see. “
As many companies rapidly accelerated their digitization efforts in the wake of the pandemic, various investment themes, in particular cyber, cloud and biotech, also benefited, argued Dillard. She also highlighted the surge in the energy transition, the growing need to strengthen domestic infrastructure, and the performance of the Nasdaq 100 index.
“The Nasdaq 100 companies represent the modern industrial way we all live,” said Dillard. “We are seeing global demand that has continued to grow during the pandemic. In 2020, net inflows of over $ 23 billion went into NDX ETF products, underscoring the strength of the Nasdaq 100 companies. “
In addition to these topics, Dillard and the other panelists spoke about the emergence of ESG in popular investment strategies.
“The industry recognizes the fundamental differences between environmental, social and governance criteria. They fit into portfolios in very different ways and offer investors different levels of exposure, ”said Dillard. “But we are finally seeing an understanding that ESG is not just about clean energy. it also doesn’t just mean gender diversity. The level of sophistication in the ESG investing community has accelerated. “
Since ESG is a top priority for many investors, Molesphini emphasized that when talking to customers and prospects, “you are not only offering them a product, but your company too”.
“We have found that the best way to have an effective discussion about ESG is to approach it with a results-based mindset,” added Dillard. “What are you trying to achieve and what are your customers asking you, is it E or S or G?”
Molesphini also emphasized the importance of communicating and engaging with customers, especially in a rapidly changing market environment, not only in terms of ESG but also in terms of new products and market conditions.
“We had market volatility and market trends that came before the virus – low rates and people looking to diversify, look for alternative asset classes, and look for more thematic investments,” Molesphini said. “You can see that some of our ETF providers are bringing more products to market. In addition to the current investment themes, you have the virus: [and you have to] Get in touch with customers and inform them about the latest developments, but also make sure that they feel comfortable in this environment. “
ETF Trends’s Nadig reflected on his recent experience with financial advisors, noting that they “talk about having fewer and better relationships,” and many have adopted new technology.
“Most [advisors] report that all of this has improved their relationships with their customers. They had more frequent and more meaningful contact, ”said Nadig.
“I would argue that to some extent an element of humanization has emerged as a result that can deepen partnerships. I definitely think the idea of these fewer and deeper partnerships has caught on, ”noted Dillard.
“Portfolios get very complex,” said Dillard. “All of this has to do with more education and working with the right partners. It also means listening to our customers and understanding which investors they are targeting because I can promise you that whoever wants fixed income products is probably not the same who want a crypto product. “