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Financial Advisors Leveraging ETFs in Clients' Portfolios


Convenience and liquidity ranked as top advantages of fixed income ETFs for retail investors.

MINYANVILLE ORIGINAL The majority of financial advisors, 78%, plan to increase their use of exchange traded funds (ETFs) in retail investors' portfolios over the next year, according to a survey by investment management firm Guggenheim Investments. The data was derived from polling attendees of a Morningstar Conference in Chicago. Another 20% were undecided about using the financial vehicles, which provide access to virtually every market segment.

Just 1% would not add more ETFs to clients' investment mix, which is probably to be expected given the title of the conference they were attending: "ETF Invest."

Nearly three-quarters (71%) of the advisors surveyed said convenience and liquidity were the biggest advantages in incorporating fixed income ETFs into retail investors' portfolios. While 16% cited low cost as the biggest advantage, the remaining 13% said transparency and tax advantages were most important.

On the flip side, the most significant obstacles preventing greater adoption of fixed income ETFs by financial advisors included the current low interest rate situation (41%) and economic uncertainty (27%). The remainder cited credit risk, market volatility, and potential tax changes.

Over 30% of the financial advisors said they would wait to see what happens with tax laws after the election before making any changes to their clients' investments. The survey sponsor, Guggenheim Investments, offers numerous exchange traded products, including the Wilshire 5000 Total Market ETF (NYSEARCA:WFVK) and the Guggenheim BulletShares 2013 Corporate Bond ETF (NYSEARCA:BSCD).

For more on ETFs, consider these articles from Max Isaacman, author of "Winning With ETF Strategies" and frequent contributor to Minyanville:

Small Cap ETFs to Consider

Emerging Markets and Domestic and Foreign Small-Cap for High Beta Trades

Here's How to Trade Low-Volume ETFs.

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