Aggressive, Knowledgeable and Wealthy Investors Find Exchange Traded Funds Attractive Alternative to Mutual Funds


CHICAGO, IL--(Marketwired - Jul 30, 2013) - High Net Worth (HNW) investors and investors who are knowledgeable about their investment choices are purchasing Exchange Traded Funds at a higher rate than other investors, according to Exchange Traded Funds Investing by the HNW, a 2013 Spectrem Group Perspective.

Exchange Traded Funds are attractive to investors as a way to diversify their portfolio, and because they have lower fees and expenses. The Spectrem Group report details how investors view ETFs, why they are purchasing them, and how they are compared to more traditional investments such as mutual funds.

ETFs are becoming more mainstream as an investment opportunity.

  • Twenty-eight percent of investors own ETFs, up from 16 percent in 2008.
  • Forty-seven percent of investors in the Ultra High Net Worth ($5 million to $25 million not including primary residence) segment own ETFs. Forty-five percent of investors who consider themselves knowledgeable about their investment choices own ETFs.
  • Forty-eight percent of investors who own ETFs do so because of low operating expenses, while 44 percent have invested in ETFs on the recommendation of their financial advisor.

"Although Exchange Traded Funds have been in existence for 20 years, they are still considered a relatively new product, and therefore are still making inroads into wealthy investors' portfolios," says George H. Walper Jr., President of Spectrem Group.

Because ETFs are not as well understood as mutual funds, conservative investors tend to avoid purchasing ETFs, while aggressive investors are choosing to invest in them. Thirty-six percent of investors who identify themselves as aggressive own ETFs, versus only 14 percent of conservative investors.

"The risk factor also explains why wealthier investors are more likely to purchase ETFs," Walper said. "They can afford to make initial investments in alternative products."

Additional insights about the ETF market are available at Spectrem's Millionaire Corner, including:

About Spectrem Group
Spectrem Group is a strategic consulting and market research firm specializing in the affluent and retirement markets. Spectrem Group strategically analyzes its ongoing primary research with investors to assist financial providers and advisors in understanding the Voice of the Investor.