Most Financial Advisors Shift to ETFs


ISS Market Intelligence, a leading global provider of data, analytics, insights, media, and events solutions to the global financial services industry and part of the ISS STOXX GmbH group of companies, announced the release of its latest report, Evolving Portfolio Construction and Active ETF Decision Framework.

The report provides a comprehensive overview of product strategy and development challenges in the asset management industry, with a particular focus on the opportunities and risks of launching products in the active ETF product category. The study places product strategy in the broader context of the evolution in advisor approaches to crafting investor portfolios. It includes a detailed analysis of product development, prioritization for asset managers, the dynamic advisor portfolio landscape, and a decision framework for those entering or expanding in the active ETF product segment.

Drawing upon findings from a recent ISS MI survey of financial advisors and harnessing data and expertise from across ISS MI research platforms, the report highlights key dynamics asset managers face as they navigate a crowded, increasingly multi-vehicle and multi-strategy product landscape.

Notably, the report tracks a significant shift in sentiment as advisors increasingly favor ETFs, making it the new battlefield for active managers. Asked in a September survey how they would invest client assets if a favored manager is available across vehicle types, 57 percent preferred ETFs over open-end mutual funds and separately managed accounts—a material increase from the 49 percent recorded two years earlier.

“Product excellence is a necessary but insufficient ingredient for success in the active ETF arena. The right packaging, sales, and distribution strategies are essential. Getting those right is impossible without understanding the role advisors see them playing in their client portfolios,” said Christopher Davis, Head of U.S. Fund Research for ISS Market Intelligence. “This report marries deep understanding of the asset management business with our insights into advisor behavior to outline potential paths to success in the active ETF space.”

Learn more about the Evolving Portfolio Construction and Active ETF Decision Framework report here.

Source: ISS



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