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ETF Assets To Near A Trillion in 2011

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A study published from Strategic Insight (SI) shows the assets in ETFs reaching $1 trillion by 2011. The report highlighted a major shift in the investment advisory business prompted by asset allocation models and fee-based investment advice.

Even though 2008 had the worst stock market performance since 1931, U.S.-listed ETFs still managed to rake in assets. ETFs took in a net $176 billion, which was 29 percent higher compared to 2007. Because of last year’s sharp market declines, the total value of ETF assets fell by $78 billion to $536 billion.

The SI report surveyed 85 registered investment advisors and found that 24 percent plan to significantly increase their usage of ETFs. Another 49 percent of advisors said they planned to increase their usage of ETFs, but not by significantly more. Just 5 percent of advisors reported they would reduce their usage of ETFs.

In other research, Rydex Investments published the results of its Advisor Benchmarketing Supplemental Survey. The survey found that open-ended mutual funds and ETFs will be a primary vehicle or product focus for 2009 for investments.

When selecting ETFs for their clients’ portfolios, investment objective and index exposure are the most important criteria, according to 60 percent of advisors surveyed by Rydex. The second and third most important decision-making criteria are fees (45 percent) and benchmark tracking accuracy (35 percent), respectively.

It’s interesting to note that more than a third of advisors (38 percent) do not find Morningstar rankings (or rankings from other research providers) important as a decision criteria for ETF investment.

Most of the advisors (55 percent) surveyed review the ETF universe and their clients’ ETF holdings monthly.

Ron Delegge is editor of