ETFs Are Grabbing The Attention Of Retail Investors

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February 18, 2010 3:27pm ETF BASIC NEWS

attention“Exchange-traded funds, once the province of professional investors, are gaining popularity among individuals, especially those who use discount brokerages. ETFs, typically index-tracking


 mutual funds that trade on an exchange like a stock, also have increasingly found favor with the financial advisers who serve the retail market,” Ian Salisbury Reports From The WSJ.

“In one recent survey of about 4,000 well-to-do investors, 11% said they own an ETF, up from 9% a year ago. Investors who bought ETFs tended to be slightly younger and wealthier than the overall pool, according to market research firm Cogent Research LLC. Cogent found investors favored low-cost ETFs, especially those from Vanguard Group, a company with a long history of catering to do-it-yourself investors. Also popular were the controversial leveraged ETFs, which were held by about one in five of the investors that owned ETFs, according to Cogent,” Salisbury Reports.

“ETFs’ popularity recently got a boost when two well-known discount brokerages cut commissions for investors trading the funds. In November, Charles Schwab Corp. said investors would be able to trade eight broad-based Schwab-brand stock ETFs for no charge in online Schwab brokerage accounts. Earlier this month, Fidelity Investments made a similar offer covering 25 popular BlackRock Inc. iShares stock and bond ETFs,” Salisbury Reports.

“We’re seeing increasing interest from our customers,” says James Burton, president of Fidelity’s retail brokerage, who adds that ETFs represent only about 3% of the unit’s customer assets but about 20% of trading volume—double the level in 2007.

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