The idea of beating the market has become less of a goal over time after the market crash of 2008, which has led to less interest in actively managed mutual funds.
“There has been a huge shift in the financial community in the last decade away from commissions and to fee-based advice,” Joel Dickson of Vanguard said.
Now, about 60% of assets managed by advisors are fee-based, Dickson said. Without favored commission-paying products to sell, advisors naturally gravitate toward low-cost investment tools. “And those low-cost options are predominantly on the ETF side,” Dickson said. [iShares: Comparing Mutual Funds and ETFs]
However, traditional U.S. mutual funds still hold more than seven times the assets that ETFs have, a sign of the growth potential that lies ahead.
Tisha Guerrero contributed to this article.