Survey reveals biggest ETF users

A survey of advisors reveals that ETF use is most prevalent among a certain demographic

Many believe that the popularity of ETFs is mostly driven by younger investors, especially millennials with a general preference for self-directed investing. However, a new whitepaper released by Pershing LLC in conjunction with Beacon Strategies LLC has found that in fact, investors aged between 51 and 70 years old who work with advisors are the largest users of ETFs, with those over 71 next in the ranking.

The report entitled The Evolving ETF: Using Exchange Traded Funds in Client Portfolios surveyed more than 1,500 advisors around the world. Based on results, more than two thirds of advisors who use ETFs have plans to dial up their usage over the next 12 months, while 55% report that more than half of their clients’ portfolios already include ETFs.

"The widespread assumption across the investment management industry is that the continued growth and popularity of ETFs is being driven by younger investors. However, advisors are telling us that this is not necessarily the case," said Justin Fay, director of financial solutions for alternative investments and ETFs at Pershing.

"We found that ETF usage in portfolios is most prominent among the Baby Boomer and Greatest Generation populations, mainly because these investors have become increasingly aware of the cost efficiency and access to a variety of styles that ETFs may provide, which can help them achieve their financial goals," he said.

The survey also found a majority of advisors, amounting to 64%, using ETFs as a core strategy in their clients’ portfolios. With regards to ETF research, most advisors identified “underlying costs” as an area that requires more information. But when it comes to ETF selection, performance was tagged as the most important factor (43%) and the provider’s brand recognition is the least important (2%).

The paper also shows that advisors are mostly drawn to ETFs as an investment vehicle because of cost considerations (35%) and investor awareness (21%). The paper notes a general assessment among advisors that greater scrutiny of investment expenses, which is expected from new rules such as that imposed by the US Department of Labor, will likely make the low cost of ETFs even more enticing.


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