product usage

Part 2: Mutual Funds over ETFs

Sponsored by Lockwood | When asked about their preferences for investment types, advisors overwhelmingly point to mutual funds as their preferred investment vehicle for client funds.

When asked about their preferences for investment types, advisors overwhelmingly point to mutual funds as their preferred investment vehicle for client funds. Overall, 57% of advisors said they invested a meaningful (40%-50%) or significant (over 75%) portion of client assets in mutual funds. ETFs were advisors’ second most preferred investment vehicle. About 26% of advisors reported that a meaningful or significant portion of their clients’ assets is invested using ETFs.

The strength of this trend favoring mutual funds varies by advisor channel, however. For instance, the gap between the use of mutual funds and ETFs is much smaller among advisors from independent firms, who favor mutual funds less than do advisors from large firms. Meanwhile the gap is pronounced among advisors at large firms, to the point where these advisors are just as likely to keep 40% or more of client assets in separately managed accounts (21%) as they are in ETFs (22%). The difference in preference may be partly a result of the fact that advisors at large firms tend to prefer active management styles more than do independent advisors.

NEXT: Active over Passive

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