ETF providers are poised to capture a bigger slice of affluent investors’ assets, according to the results of a Cogent Reports study conducted by Market Strategies International.
The study points to a greater proportion of affluent investors buying ETFs in the future.
One in five (21%) investors with at least $100,000 in investable assets now own an ETF, up from 18% in 2016. And among affluent investors who plan to purchase an ETF within the next three months, 39% are considering the product for the first time.
The report found that financial advisors will likely continue to play a substantial role in the growing popularity of ETFs with half (51%) of current ETF owners working with an advisor. According to Cogent advisor research, a record high four in five (81%) advisors reported selling ETFs in 2018, and 57% 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,” said Julia Johnston-Ketterer, Senior Product Director at Market Strategies International. “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.
The ETF providers earning the strongest consideration among affluent investors this year are Vanguard, Fidelity Investments, iShares, Charles Schwab Investment Management, and SPDR ETFs.
“To attract the attention of financial advisors, the most important aspects for ETF providers to convey are value for money, being a leader in the ETF industry, and consistent performance,” added Meredith Rice, Vice President at Market Strategies International. “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.”