Alternative investments are a key battleground in the ETF versus mutual fund rivalry. More investors are moving into nontraditional asset classes beyond stocks and bonds in search of return, yield and diversification.
According to Cogent Research, 29% of advisors who use alternative assets or strategies expect to raise their ETF allocations, whereas only 17% plan to utilize more mutual fund products. [Institutional Investors Tap ETFs for Risk Trades]
Additionally, those who aren’t using ETFs for alts are almost twice as likely to begin utilizing ETFs for alts exposure – of those surveyed, 17% expressed desire to use alts ETFs while 9% wanted to use alts-related mutual funds.
“Advisors continue to flock to ETFs that access alternative investments for the same reasons they seek this vehicle in traditional asset classes – cost efficiency, liquidity, and transparency,” Steven Sixt, Senior Project Director and co-author of the report, said in a press release.
Sixt also noted that ETF providers should target alts investors, or “alternative investment dabblers,” and advisors with relatively smaller portfolios as they tend to prefer ETFs over mutual funds.
“While ETFs are gaining in popularity and garner nearly equal consideration for accessing several AI strategies, particularly long-short commodities, long-short currencies, and long-short interest, advisors overwhelmingly prefer mutual funds when accessing multi-strategy/multi-alternative strategies,” Cogent Research said in a press release.
For more information on ETFs and mutual funds, visit our mutual funds category.
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.