Surveys point to increasing ETF usage among financial advisers

Oct 30th, 2012 | By | Category: ETF and Index News

Almost four-fifths (78%) of financial advisers plan to increase their use of ETFs in retail investors’ portfolios over the next year, according to a survey of carried out by Guggenheim Investments at Morningstar’s recent ETF Invest Conference in Chicago.

Surveys point to increasing ETF usage among financial advisors

Recent surveys by Guggenheim Investments and Invesco point to increasing ETF usage among financial advisors.

While the survey paints a rosy outlook for ETFs in general, the results demonstrate a growing recognition among advisers of the benefits of fixed income ETFs.

Nearly three quarters (71%) of advisers believe convenience and liquidity are the biggest advantages to incorporating fixed income ETFs into retail investor portfolios. While 16% of financial advisers cite low costs as the biggest advantage, the remaining 13% say transparency and tax advantages are the biggest benefits of using fixed income ETFs in retail client portfolios.

“The results from the survey at Morningstar indicate a growing appetite amongst financial advisers to incorporate ETFs into retail investors’ portfolios over the next year,” said William Belden, Director of Product Development at Guggenheim Investments.

He added: “The potential benefits of fixed income ETFs, such as liquidity and convenience, will be a significant impetus to advisers’ increased usage of fixed income ETFs.”

The findings of the Guggenheim poll corroborate the results of a survey conducted earlier in the month by Invesco, which showed that advisers expect that ETFs will make up 24% of portfolio allocations over the next 12 months and 33% over the next three years, up 10% on the results reported in last year’s survey.

“This year’s study continues to show how advisers are embracing the value of ETFs and the many ways they can be implemented in their clients’ portfolios,” said Bobby Brooks, National Sales Director for Invesco PowerShares.

The survey also showed that advisers continue to blend active and passive funds in a single portfolio, with 40% of advisers agreeing that now, more than ever, they are creating client portfolios using a blend of active investment vehicles and passive ETFs.

Similar trends are expected in the UK.

In a report on the asset management industry Morgan Stanley recently predicted that the adoption of ETFs in the UK would accelerate following the introduction of the FSA’s Retail Distribution Review (RDR), which would put ETFs on an even footing with traditional mutual funds, which have typically paid lucrative rebates to advisers.

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