A study at Vanguard Group found that 83% of all transactions tied to mutual funds tracked during the five-year period were long term in nature. Meanwhile, 62% of the firm’s deals in leading ETFs were categorized as stemming from strategic-allocation decisions. [Slow and Steady: Investors Favoring Dividend, Low-Volatility ETFs]
“Our evidence suggests that we’re not seeing ETFs cause people to trade more frequently. Rather, what we’re finding is that people who trade more are choosing ETFs more frequently these days,” Joel Dickson, Vanguard’s senior ETF investment strategist said.
The flexibility of an ETF to develop a long term asset allocation plan and to assist investors in making diversified, low-cost investment choices has been recognized by many long term investors.
Tisha Guerrero contributed to this article.