A recent survey from the BetaShares/Investment Trends ETF Report indicates that the growth of exchange traded funds is still in the very early innings. The number of investors using ETFs will grow to about 80,000 by the end of next year, according to the report.
The survey suggests the number of ETF investors will double by the end of 2012, while a December 2010 report proved that about 53,000 investors were using ETFs at that time. Alison Bevege for Financial Standard reports that the main roadblocks stopping investors from using ETFs were lack of product knowledge, and a preference for actively managed funds.
“That’s the way they’ve been remunerated for decades,” Ilan Israelstam, head of strategy at ETF provider BetaShares, said. “That’s changing because of the quite obvious reforms taking place in the way they charge clients. The adviser preference for managed funds was historical.” [Are Specialty ETFs Right For You?]
“Low fees and diversification were the main drivers of the product’s use. An investor would be $82,000 better off if management fees were 0.39%,” Drew Corbett, Head of Investment Strategy and Distribution, BetaShares, said.”The underperformance of active managers across common indices also highlights the role of fees,” he said.
The survey polled 7,811 investors, and 778 advisors, regarding the use of ETFs. The survey also found that 27% of financial planners use ETFs, and another 27% have plans to use them in the future. [The Basics of Trading with ETFs.]
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.