A staggering number of Registered Investment Advisors will not recommend new commodity ETFs to their clients, according to a new study released today by Rivermark Research, a privately held research and consulting firm that specializes in demand and competitive intelligence for ETFs and Mutual Funds.
“The days of one-size fits all are dead, and identifying pockets of demand is the new reality. Clearly RIA firms claim adequate coverage in the commodity space, so new funds must either look to other market segments or rethink their strategy.”
The study, commissioned by a private party, asked RIA respondents whether they believe ETF sponsors should continue to bring new commodity investments to market.
80.6 % of advisors surveyed say new commodity ETFs are unnecessary, with most advisors listing “oversaturation” of the marketplace as the number one reason, followed by “product complexity” and “risk.”
25.2 % of advisors surveyed also believe new ETF products — outside of commodity funds — will not serve a purpose in their clients’ portfolios.
“An overwhelming percentage of advisors do not believe that new commodity ETF and ETN products, such as gold, oil and other energy and precious metal ETFs will fill any portfolio holes that are not already available in current products,” said Robert Crain, Vice President of Analytics and Research at Rivermark. RIA firms are one of 18 market segments that Rivermark analyzes in each study.
With over seven hundred new products in registration with regulators, Rivermark reasons that ETF sponsors across the board will soon look to adopt a more scientific, demand-focused approach to product development.
“The study shows that sponsors need to target specific segments and strategies within the investment community,” says James Denke, a Principal at Rivermark. “The days of one-size fits all are dead, and identifying pockets of demand is the new reality. Clearly RIA firms claim adequate coverage in the commodity space, so new funds must either look to other market segments or rethink their strategy.”
In addition, the study reveals that of the 14.5 % of respondents who indicated a willingness to purchase new commodity fund products, most would like to find a more efficient way to access precious metals.
32.3 % of respondents showed strong demand in three areas outside of commodities. Rivermark did not disclose that portion of the study.
About this study: Rivermark contacted 500 Registered Investment Advisors domiciled in the U.S. Before participation, advisors must have qualified as active ETF investors or have placed both and buy and sell orders for an ETF within the prior 3 months. For more information, please contact Rivermark by email at [email protected] or by phone at (214) 800-5183.
Rivermark Research LLC is a privately held research and consulting firm that specializes in ETF marketplace information. Based in Dallas, Texas, Rivermark conducts customized proprietary research for matters closely-related to product distribution and placement, exchange relationships, trading, volume forecasting, and others areas pertinent to asset managers. For more information, please visit www.rivermarkresearch.com.
Rivermark Research LLC
Daniel White, 212-961-6287