Exchange traded funds are among the go-to investment picks among financial advisors seeking to build a cheap, tax-efficient and diversified portfolio for clients.
According to a recent survey conducted by the Journal of Financial Planning and the FPA Research and Practice Institute, a survey of financial advisors revealed that 83% of respondents indicated that they are currently using ETFs or are recommending them to clients, reports Michelle Zhou for Financial Planning.
Related: ETF Investors Are Buying the Dips
Survey respondents also revealed they plan to increase their ETF usage next year. In contrast, mutual funds, the traditional investment portfolio staple, has only found favor among a relative minority of advisors.
“Index funds including ETFs have really become dominant in the industry,” Dave Yeske, practitioner editor of the Journal of Financial Planning, told Financial Planning.
Yeske argued that the survey only confirms the idea that advisors are embracing the benefits of ETF investments, such as evidence that passive investments provide more consistent and reliable returns over the long run.
“When I first started working in this business, ETFs were just getting popular,” George Gagliardi, a certified financial planner with Coromandel Wealth Management, told CNBC. “They made sense to me in terms of being the best building blocks available. They were more tax efficient, transparent and less expensive than most open-ended index funds. They also had a variety of options that has continued to increase.”