Financial advisors are increasingly willing to add exchange traded funds as the best fit for their investment portfolios and are utilizing the investment vehicle to capture upside potential and hedge downside risk.

According to the annual advisor survey conducted by and Brown Brothers Harriman, which included about 50% registered investment advisors, 15% registered reps of broker-dealers, 15% of professional investors and a few individual investors, 65% of respondents revealed that they are comfortable with adding new ETFs that have come to market less than a year ago, compared to 50% of respondents last year, writes James J. Green for ThinkAdvisor.

Shawn McNinch, global head of ETF services at Brown Brothers Harriman, points out that “more adoption of ETFs by advisors over all,” and while advisors adopted ETFs “originally as a cheap way to get beta exposure,” more are now using them to generate alpha as well. [RIAs Continue to Embrace ETFs]

Advisors are also allocating a greater portion of their portfolios to ETFs, with 32% of respondents stating they had at least half of their total assets under management invested in exchange traded products, which include both ETFs and exchange traded notes, compared to 19% of respondents last year.

More financial advisors are including alternative, smart-beta index-based ETFs into the mix, with 49% of respondents saying the have bought a smart-beta ETF, but 57% mention that the ETFs make up less than 5% of their total AUM. [What Smart Beta ETFs Bring to the Table]

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