95% of advisers using ETFs

Around 70% of financial advice professionals have indicated their increased use of exchange traded funds (ETFs) over the past 12 months, according to the latest VanEck research.

The research, released this week, said the 70% number was up from 62% last year, with almost all financial advisers (95%) indicating they use ETFs (up from 91% in 2021 and 87% in 2020).

The survey analysis attributed the upturn in ETF usage to changes to the economic outlook, with 42% of respondents citing a change in portfolio strategy as one of the main reasons they used ETFs more often.

Reduced portfolio costs (49%) and increased knowledge and awareness of ETFs internally (36%) also made the top three drivers for 2024.

Commenting on the findings, VanEck Asia Pacific chief executive and managing director, Arian Neiron said the findings demonstrate an overwhelming preference for ETFs by financial professionals.

“The improved control over portfolio outcomes was reported as one of the key advantages of ETFs. Advisers want more control, better relative performance, and greater cost efficiency, and ETFs are uniquely placed to offer all three,” he said.

The survey found that of the 47% of respondents who had an existing smart beta allocation, most (59%) used at least two of these strategies across their client portfolios, 64% found they outperformed active strategies, and 99% were satisfied with their smart beta investments.

“Smart beta strategies have transitioned from market disruptor to the mainstream. A significant proportion of practitioners are incorporating smart beta ETFs into portfolios, with one in two respondents saying they had an existing allocation and a further 21% currently evaluating them. We anticipate a greater adoption rate as more financial professionals become acquainted with the benefits and portfolio construction opportunities of smart beta ETFs,” Neiron said.

“Smart beta is an evolution of the first-generation ETFs. These go beyond tracking a market capitalisation index by applying more sophisticated investment strategies with targeted outcomes – typically for a fraction of the cost of active strategies.”