Supporting the rapid growth of the exchange traded fund industry, a larger number of registered investment advisors, or RIAs, have come to appreciate the benefits of the nifty investment vehicle and plan to increase their exposure ahead.
According to a recent Wealth Management report on RIA investment trends as of the end of 2016, ETFs remain a popular investment vehicle, with only 15% of advisors indicating that they do not use ETFs for clients.
Among the most attractive attributes of the ETF tool, the cost advantage appears to resonate with RIAs as the most important factor in adoption. About 69% of those surveyed indicated that fees were the main reason for ETF usage, followed by targeted sector exposure, transparency, taxes, trading, benchmark tracking accuracy and style exposure.
“In total, the responses illustrate a wide variety of ETF characteristics that increasingly allow RIAs to customize the exposure that fits with their clients’ risk profiles and time horizons,” according to a Wealth Management note.
Sector plays and core investments remain the most important strategic role within ETF client portfolios, but more specific or targeted ETF plays are seeing lower utilization rates.