Advisers continue to increase allocations to ETFs, study finds

Advisers continue to increase allocations to ETFs, study finds
RIAs, younger advisers heaviest users of exchange-traded funds, says Broadridge
JAN 15, 2020

The popularity of low-cost exchange-traded funds among advisers does not seem to be peaking, according to the results of a survey which found that 73% of advisers anticipate their allocation to ETFs will continue to increase in 2020.

The study, by Broadridge Financial Solutions, polled more than 500 advisers and found that 83% increased their asset allocations to ETFs over the past two years. Among advisers planning to allocate more assets to ETFs this year, 55% plan to primarily shift assets away from actively managed equity mutual funds and 15% from individual stocks, followed by shifts from passive equity index mutual funds (14%), cash and equivalents (9%) and bonds or fixed-income mutual funds (5%).

The likelihood of an adviser shifting from actively managed funds to ETFs increases among younger financial advisers, with 64% of advisers under the age of 40 planning to make the change, Broadridge said in a release.

The survey found that 36% of advisers use ETFs primarily for core positions, although usage varies by AUM and channel. RIAs are the most likely to use ETFs for core portfolio positions (52%), followed by wirehouse advisers (36%) and IBD/regional advisers (31%). Nearly half (48%) of larger advisers (those managing more than $500 million in assets) use ETFs primarily for core positions.

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