As the exchange traded fund industry grows and attracts greater attention, institutional investors have played a big part in the quick expansion in the ETF universe.

The evolution of the institutional usage of ETFs has been fun to see, Brian ODonnell, SVP, Head of Business Strategy, Northern Trust Asset Management, said at the Inside ETFs conference. Institutional investors are always looking for low-cost, beta ETFs, as you can imagine for things like transition management, securities, in lieu of futures a lot of things weve been seeing for a long time.

ODonnell also pointed to growing demand for targeted market plays or precise themes that ETFs may provide easy access to, such as real assets.

For example,infrastructure ETFs, such as the FlexShares STOXX Global Broad Infrastructure Index Fund (NYSEArca: NFRA), offer investors sound fundamentals and above-average dividend yields, making the asset class appealing in the current market environment. NFRA tries to reflect the performance of the STOXX Global Broad Infrastructure Index, which identifies equities that derive the majority of revenue from infrastructure business, providing exposure to not only infrastructure sectors, but non-traditional ones as well.

The FlexShares Morningstar Global Upstream Natural Resource Index Fund (NYSEArca: GUNR) provides exposure to the rising demand for natural resources and tracks global companies in the energy, metals and agriculture sectors while maintaining a core exposure to the timberlands and water resources sectors, is a part of the risk management theme. GUNR specifically identifies upstream natural resources equities based on a Morningstar industry classification system, with a balanced exposure to three traditional natural resource sectors, including agriculture, energy, and metals.

Lastly, the FlexShares Global Quality Real Estate Index Fund (NYSEArca: GQRE) targets the Northern Trust Global Quality Real Estate Index, a fundamentally-weighted index that focuses on commercial and residential REITs. Mortgage REITs, real estate finance companies, mortgage brokers and bankers, commercial and residential real estate brokers, and real estate agents and home builders are among the securities excluded from the index. GQRE also features significant ex-US exposure, a trait that should serve the fund as a slew of central banks besides the Federal Reserve consider lowering interest rates. While REITs are trading at the higher end of historical valuation ranges, the group is generating robust cash to support dividend hikes.

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ETF Themes That Have Attracted Institutional Investment Interest - ETF Trends