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May 02, 2014 at 11:56 AM
Nearly two-thirds of financial advisors use exchange-traded funds as a core holding to cost-efficiently diversify clients’ portfolios, according to new research.
Cerulli Associates discloses this finding in “Advisor Metrics 2013: Understanding and Addressing a More Sophisticated Population.” In its ninth iteration, the annual report highlights the research firm’s quantitative coverage of U.S. financial advisors in all channels.
The report reveals that 30 percent of advisors surveyed “often” use ETFs to diversify portfolios at low cost. An additional 33 percent of advisors “sometimes” invest in ETFs for this purpose, the report shows.
Advisors often employ ETFs as well to achieve sector-specific exposure (e.g., health care or technology), integrate into a “core satellite strategy,” or to apply a thematic approach to portfolio construction. Less than one-fifth (19 percent) of advisors frequently use ETFs to secure these investment objectives.
