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Majority of investors are interested in ETFs, yet fewer than half have discussed them with their financial advisors, says survey

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John Hancock Investments' survey of affluent investors has found significant investor interest in exchange-traded funds (ETFs). Yet at the same time, investors says they have limited knowledge of the ETFs and want to learn more from their financial advisors.

ETFs, which have grown in popularity in recent years, are similar to mutual funds in that they offer investors shares in a pool of stocks, bonds, or other assets. However, unlike mutual fund shares, which are priced only once a day, ETF shares can be bought or sold throughout the trading day on a stock exchange at a market-determined price. ETFs are widely viewed as a low-cost and tax-efficient way to gain market exposure.
 
The survey found that more than half of investors preferred combining active and passive investment strategies in their portfolios. Investors also cited strong performance, diversification, and low cost as key priorities when selecting investments.
 
"ETFs, particularly strategic beta ETFs, have become more widely accepted in recent years, yet our research reveals an opportunity for advisors to better educate investors about their benefits," noted Karen McCafferty, head of marketing for John Hancock Investments. Strategic beta investment approaches, or rules-based index strategies that deviate from market capitalization weights, are often implemented through ETFs.
 
The survey revealed that nearly half of the respondents rely primarily on a financial advisor for advice; however, advisors do not always take the lead in conversations about ETFs. Forty per cent of investors who have discussed ETFs with their advisor initiated the conversation themselves.
Investors are less familiar with ETFs than with other investment vehicles, such as mutual funds.
 
Surprisingly, given the sophistication of this group of investors, only 31 per cent described themselves as somewhat familiar with ETFs, while 37 per cent were not very familiar or not at all familiar. Half said they did not hold any ETFs in their investment portfolios, 32 per cent said they did hold ETFs, and 18 per cent didn't know.
 
More than two-thirds of investors surveyed (71 per cent) said they would possibly consider adding ETFs to their portfolios. Fifty-one per cent of investors surveyed said they were either very interested or somewhat interested in speaking with a financial advisor about ETFs. Of those who do own ETFs, many invest in those based on U.S. equities (40 per cent), including the S&P 500 Index.  
 
Those who have invested in ETFs say they are taking a long-term view, with 63 per cent saying they have implemented ETFs into their retirement planning. Nearly all surveyed (91 per cent) said that their most important investment goal was ensuring a comfortable retirement.

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