While mutual funds remain a highly popular investment vehicle among financial professionals and their clients, survey and anecdotal evidence suggests interest in exchange-traded funds is growing at an impressive rate.
One recent survey from the private investment bank Brown Brothers Harriman, for example, showed 95% of financial advisors, institutional investors and fund managers expect to increase their ETF allocations over the next 12 months. Nearly 30% of the surveyed investors plan to re-allocate from both actively managed and index-based mutual funds to ETFs, while 33% said they would shift their passive allocation to active ETFs over the next 12 months.
There are a number of reasons ETFs are gaining so much traction among both retail and institutional investors — including people saving for retirement. Investors in the BBH survey cited ETFs’ transparency and tax efficiency as key features, while others pointed to the ability to access cryptocurrency and other alternative investments via the ETF wrapper.
For advisors, it is important to understand the tax implications of ETF investments, which differ from mutual funds in many respects. To that end, we invite you to take ThinkAdvisor's latest Tax Facts Quiz in this slideshow.
Only the tax-savviest can ace the test, but all advisors can benefit from the refresher.
Want more tax-focused insights? Find current and accurate answers to your tax questions with Tax Facts.
Images: Chris Nicholls/Touchpoint Markets
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