Cerulli Study Sees More Financial Advisor Interest in ETFs
Almost half of advisors who responded to a recent Cerulli Associates survey said they intend to increase their clients’ allocation to alternative investments in the coming years, including non-core exchange-traded funds.
Within that universe of alternative investments, Cerulli is including exchange-traded funds—but only those that pursue an alternative strategy or asset class.
Overall, ETFs have grown at an astonishing clip over the past five years; although they, like other types of investments, have seen their assets fall recently. According to latest figures from the Investment Company Institute, ETF assets decreased $109.64 billion, or 19.6%, during the past 12 months. In February, the combined assets of the country’s ETFs were $449.67 billion, ICI said. But, that’s a 9.2% drop from the month before.
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Even so, Cerulli believes that advisors are taking a new look at certain types of alternative investments and ETFs because of the market meltdown.
Cindy Zarker, Cerulli’s director of research, said her firm’s study, entitled “Alternative Investments in the Retail Marketplace: Evaluating Opportunities and Growth,” looked at just “how retail asset managers are going to bring alternatives down market to the mass market. And then one of the things we stumbled upon was a need to educate advisors and clients on what alternatives are.”
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My firm works with thousands of financial advisors and I think ETFs have been helped by several trends- first, more advisors are using fee-based accounts, so they still get paid for choosing ETFs versus mutual funds, and second, more advisors are moving to independent firms where there is less focus on using just the firm’s in-house or pre-screened family of funds.