According to the latest data from Cogent Reports, ETF providers are poised to capture a bigger slice of affluent investors’ assets.
One in five investors (21 per cent) with at least USD100,000 in investable assets now owns an exchange-traded fund, up significantly from 18 per cent in 2016. And among affluent investors who plan to purchase an ETF within the next three months, four in ten (39 per cent) are considering the product for the first time. These and other findings are included in Investor Brand Builder, an annual Cogent Reports study by Market Strategies International-Morpace.
Financial advisors play a substantial role in the growing popularity of exchange-traded funds, as half (51 per cent) of ETF owners work with an advisor. According to Cogent advisor research, a record high four in five (81 per cent) advisors report selling ETFs in 2018, and 57 per cent of advisors currently selling ETFs anticipate expanding their use of the product category over the next two years.
“ETF providers are enjoying the best of both worlds,” says Julia Johnston-Ketterer, senior product director at Market Strategies-Morpace’s syndicated research division and author of the report. “We see signs of growth in ETFs from both current investors and those who are new to the category. Additionally, ETF providers receive tremendous distribution support from financial advisors.”
According to Cogent Reports, affluent investors who intend to purchase an ETF in the next three months are most influenced by fee transparency, products that meet their needs, and strong returns.
“To attract the attention of financial advisors, the most important aspects for ETF providers to convey are value for the money, being a leader in the ETF industry, and consistent performance,” adds Meredith Rice, vice president at Market Strategies-Morpace. “The most successful ETF providers are conducting outreach directly to investors as well as with advisors, effectively communicating the value that their brand delivers on these critical drivers of consideration for both audiences.”