Exchange traded funds allow investors to gain exposure to various segments in the markets and offer specialized strategies to help hedge against market turns. Still, more investors are beginning to utilize ETFs toward long-term allocations.
“There’s no doubt ETFs are popular with hedge funds and day traders,” Rob DeHollander, co-founder of DeHollander & Janse, said in a Wall Street Journal article. “But they’re also finding broader acceptance among institutional investors and wealth managers with longer-term investment strategies.”
“It’s probably fair to assume that advisers are generally much more long-term focused in their ETF allocation strategies,” Alec Papazian, a Cerulli analyst, said in the article.
According to Deutsche Bank, at the end of 2011, retail investors held 47% of total ETF assets while institutional investors held 53%, which is further broken down to 25.3% among investment advisors, 20.1 among brokers, 2.8% among mutual fund managers, 2.2% among hedge funds and 2.6% among others.
Additionally, Cerulli Associates also found that only 8% of financial advisors and related money managers built investment portfolios around tactical strategies, whereas 24% used strategic allocations and about 37% utilized a hybrid of long-term and tactical positions. The firm revealed that on average between 20% and 22% allocated overall assets to short-term strategies.