The latest ETF study into the behaviour of financial advisers around ETF investing from Broadridge Financial Solutions, finds that younger financial advisers tend to prefer to use low-cost ETFs over managed mutual fund.
The study is largely focused on the US market, but the firm believes the themes are ‘universally interesting’. The study found that the use of ETFs is not evenly distributed across financial advisers with notable differences in adoption by channel.
Europe is the region of most interest for foreign market ETFs for US advisers and currently, ETFs make up 27 per cent of actively managed mutual funds in adviser asset allocation and are set to surpass actively managed mutual funds (29 per cent) in the next few years.
Broadridge found that over 35 per cent of advisers use ETFs as a core part of the portfolio, while more than a third of advisers do not have strong confidence in their knowledge level of ETFs.
“As ETFs become the primary choice for advisers, asset managers may be challenged to reconfigure fund line-ups and product development. Meanwhile, distribution heads will need to think through how to support sales and marketing,” the firm says.
