It appears that other advisors are starting to catch on to what The ETF Store has known for awhile – ETFs offer investors greater transparency and cheaper options than many mutual funds. According to an article published in the Wall Street Journal today, a survey conducted by Cogent Research found that advisors expect to reduce their clients’ holdings in mutual funds over the next few years while increasing their use of ETFs. Greater transparency and lower costs were cited as the primary drivers.
Cogent’s survey shows a continuation of a trend that has seen advisors reduce mutual fund holdings in client accounts from 35% in 2007, down to 30% currently, and an estimated 27% in 2011. Compare this to advisors’ use of ETFs which has grown from 5% in 2007, to 8% currently, and an estimated 14% by 2011. This is clear evidence that advisors are recognizing the benefits of including ETFs in client portfolios and reducing mutual fund holdings to take advantage of ETFs. As Christy White, a principal director at Cogent, points out, the survey results highlight an “industrywide problem” for mutual fund companies – one that’s not going to go away.
