RIAs Expect Another Bullish Year for Markets and ETFs

Registered investment advisors, or RIAs, are anticipating another boom year in 2018, despite some concerned voices over an aging rally, and many are turning to exchange traded funds as their investment vehicle of choice to ride out the bull.

In the latest TD Ameritrade Institutional 2018 RIA Sentiment Survey, RIAs revealed they expect their own businesses to keep expanding this year, with seven in 10 RIAs anticipating last year’s exuberance to carry over for the U.S. and global economies into 2018.

Around half of those surveyed expect equities to maintain their momentum, with the financials, materials, industrial and technology sectors leading the charge. However, a similar number of respondents anticipate bonds to weaken in the current rate environment.

“Looking ahead to 2018, RIAs generally like what they see – for their clients and for themselves,” Vanessa Oligino, Director, Business Performance Solutions, TD Ameritrade Institutional, said in a note. “And when it comes to capitalizing on the current climate for their clients, independent advisors increasingly look to ETFs as their investment vehicle of choice.”

About 55% of independent RIAs indicated they use ETFs more than mutual funds or individual stocks. Looking ahead, a third say assets for new ETF investments will come from cash in 2018 while 27% said new ETF inflows will come from mutual fund sales. RIAs in general were less likely to ditch individual stock securities for ETFs.

Advisors also pointed to factors like performance, total costs and construction of underlying indices as attractive attributes in selecting ETFs. RIAs are increasingly being selective in their ETF choices and are guided by asset allocation strategies, lower costs or liquidity.

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