High-Net-Worth Investors Flocking to ETFs
March 19th, 2013 at 8:52am by Tom Lydon
Large institutions, advisors and the average retail investor have been attracted to the ease and efficiency found in the exchange traded fund vehicle, but the fund investments are especially gaining traction among the ultra wealthy.
According to the consulting firm Spectrem Group, high-net-worth investors are taking a harder look at ETFs as a broad diversifier, reports Rob Silverblatt for U.S.News.
In a February survey, the firm revealed that 30% of millionaire investors want to invest in ETFs. In comparison, only 10% indicated desire to invest in ETFs in August 2012. [Millionaires’ Use of ETFs Rises 200% in Six Months]
“The share is up from 7 percent to 14 percent among individuals with investable assets of $500,000 up to $1 million, but remains essentially unchanged for less affluent investors,” the Spectrem Group said. “Among those with less than $100,000 less than 6 percent are likely to invest in ETFs in the next 12 months.”
The rising interest among the ultra wealthy may be associated with the shift in risk appetite.
“We’ve seen investors move back into equities in 2013,” Todd Rosenbluth, director of ETF research at S&P Capital IQ, said in the article. “People got in in January, and then they saw the market continue to move higher, and then [they] continued to move in in February.”
Some also argue that wealthy investors are taking the ETF products more seriously instead of a trending flavor-of-the-month.
“They want to make sure the trend is established [before investing],” Rob Ivanoff, president of the firm Financial Products Research, said in the article.
Moreover, investors are finding that the ETF investment vehicle is more efficient in the long run.
“If you’re tired of failing to beat the market—because the average equity mutual fund fails to beat the market on a regular basis—[then] … ETFs are a great way to get exposure to [a variety of] asset classes in a very cheap way,” Rosenbluth added. “Paying less money for it helps your returns.”
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Max Chen 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.