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Low Fees Help ETFs Attract Affluent Investors


Exchange traded funds have found their way into many investment portfolios as many capitalize on the efficient and easy-to-use passive indexing strategies, especially among the ultra-high-net-worth investors.

According to the Spectrem Group, 28% of investors own ETFs, but among the ultra-affluent investors, who are worth $5 million to $25 million, 47% own ETFs due to the investment vehicle’s low fees, reports Donald Jay Korn for On Wall Street.

George H. Walper, Jr., president of Spectrem, also believes that aggressive investors are more apt to embrace ETFs, pointing to a survey of 36% of investors who identify themselves as aggressive or very aggressive owning ETFs, compared to 14% of conservative investors.

“Wealthier investors are more likely to purchase ETFs,” Walper said in the article. “They can afford to make initial investments in alternative products.”

Spectrem also found that 44% of ETF owners typically went with the investment vehicle on the recommendation of an advisor. [More Advisors and Institutions Turn to ETF Managed Portfolios]

“Our clients want the best fee-adjusted and tax-adjusted returns,” Carol Schleif, a regional chief investment officer of asset management for Abbot Downing, said in the article. “If an ETF will deliver that, we’ll recommend the ETF.”

Moreover, ETFs also provide exposure to hard-to-reach areas. For instance, in 2012, Abbot Downing used ETFs to access the Eurozone when its global equity managers were light on the E.U. [Advisors Favor ETFs for Tactical Trades]

For more information on ETF asset flows, visit our ETF performance reports category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.