Financial advisers expect increased use of ETFs in client portfolios

Dec 4th, 2012 | By | Category: ETF and Index News

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Financial advisers expect to make increased use of exchange-traded funds (ETFs) in client portfolios, according to a recent survey of registered investment advisers in the US by Invesco, the firm behind PowerShares.

Financial advisers expect increased use of ETFs in client portfolios

Financial advisers expect to make increased use of ETFs.

Advisers surveyed believe ETFs will make up 24% of portfolio allocations over the next 12 months and 33% over the next three years, representing a 10% increase over results reported in Invesco’s survey of advisers in 2011.

Against a lingering backdrop of global economic uncertainty, advisers still see clients remaining vigilant in their aversion to risk as 91% believe their clients are more interested in minimising losses than maximising gains.

This year’s study continues to show how financial advisers are embracing the value of ETFs and the many ways they can be implemented in their clients’ portfolios.

But even as many equity markets have shown signs of strength year to date, advisers are still indicating that risk management is a primary focus and they are looking to a variety of products, including alternative assets, to manage risk.

Advisers continued to mitigate risk in client portfolios by creating a blended asset allocation of active investments and passively managed ETFs (62%).Less than a quarter of advisers now use an exclusively all active management portfolio (24%).

The survey also found a growing appetite for complex strategies, such as smart-beta ETFs, but broader adoption will require more education on how these strategies can best serve investors.

ETF adoption rates in the US have tended to lead other countries, such as the UK and Canada, suggesting that ETF usage by financial advisers in these markets can be expected to continue.

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