Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Portfolio > ETFs

Advisors are least knowledgeable about ETF liquidity

By Warren S. Hersch

X
Your article was successfully shared with the contacts you provided.

Sponsors of exchange-traded funds (ETFs) report that ETF liquidity is the subject advisors understand the least, new research reveals.

Cerulli Associates released this finding in a July 2013 report, “Cerulli Edge: U.S. Asset Management Edition.” The report explores retail educational strategies, including whitepapers, ETF education, organizational structure and staffing.

On a scale of 1 to 6, where one represents the least knowledgeable and 6 the most knowledgeable, ETF liquidity ranks 1.4 in the survey, below that of five other ETF-related topics. The survey scores knowledge of the other topics as follows:

5.1—ETF risks

4.6—How to employ ETFs in portfolio construction

4.0—The tax treatment of ETFs

3.3—How ETFs are structured

2.6—How ETFs trade

“[Liquidity and trading] should remain top of mind for providers when developing educational programs, writes Cerulli Associate Director Alec Papazian in the report. “Creating programs to meet educational needs of advisors across the spectrum of adoption and sophistication is a difficult task, but will be necessary for some time.”

Wirehouse reps and registered investment advisors are most likely to use ETFs. Cerulli pegs the ETF adoption rate of these two channels at 63 percent and 55 percent, respectively.

The report finds reduced usage among banks (44 percent), dually registered (RIA/broker-dealer) advisors (42 percent), the regional channel (42 percent), independent broker-dealers (39 percent) and insurance advisors (24 percent).

Among advisors who currently use ETFs, the report cites evaluation tools as the most valuable type of support from sponsors:

Type of assistance

Advisors using ETFs

Advisors not using ETFs

ETF evaluation tools

34%

17%

Client-approved educational material on the basics of ETFs

16%

27%

Education on trading ETFs

8%

27%

Asset allocation education on incorporating passive strategies

14%

15%

Education on incorporating passive strategies into tactical allocation

22%

8%

Other

6%

6%

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.