McNinch notes that the current low-risk tolerance among market participants has led to “innovative products that put a cap and floor to help preserve capital.”
Fees are still a major factor when investing, and McNinch points out that ETFs are a cheap way to get in and out of an asset class. Specifically, 59% of respondents say they are willing to buy more expensive ETFs if it is linked to a major benchmark index, down from 67% last year, revealing the shift away from brand recognition toward cost savings and performance.
As low-cost strategies gain a greater following, “more competition in the index space will drive down the costs” to ETF sponsors, who are “paying substantial licensing fees to index providers,” and that development will “ultimately allow [ETF sponsors] to charge a lower expense ratio,” to the benefit of advisors and end clients, McNinch added.
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Max Chen contributed to this article.