Advisors to Increase ETF Usage, Guggenheim Says


Financial advisors plan to increase their use of ETFs in retail client portfolios next year, according to a survey by Guggenheim Investments, the investment management division of Guggenheim Partners. The survey, taken earlier this month at the Morningstar ETF Invest conference in Chicago, shows 78 percent of financial advisor respondents plan to boost use of ETFs in client portfolios next year. Twenty percent are unsure if they will use ETFs more or less next year and just one percent of those surveyed anticipate decreased use of ETFs.

The numbers from the Guggenheim survey seem to jibe with a study released by Invesco (NYSE:IVZ), parent company of PowerShares, earlier this month. Registered investment advisors polled by Invesco believe ETFs will make up 24 percent of portfolio allocations over the next 12 months and 33 percent over the next three years, representing a 10 percent increase over results reported in Invesco's survey of RIAs in 201, according to the Invesco survey.

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"The results from the survey at Morningstar indicate a growing appetite amongst financial advisors to incorporate ETFs into retail investors' portfolios over the next year," said William Belden, Director of Product Development at Guggenheim Investments, in a statement. "While the anticipated tax changes in 2013 may not have an immediate impact on ETF industry growth, there will be implications for how advisors are managing their clients' portfolios. The potential benefits of fixed income ETFs, such as liquidity and convenience, will be a significant impetus to advisors' increased usage of fixed income ETF."

Over 70 percent of those polled by Guggenheim said convenience and liquidity are the primary reasons for incorporating fixed income ETFs into client portfolios while 16 percent of financial advisors cite low costs as the biggest advantage, the remaining thirteen percent say transparency and tax advantages are the biggest benefits of using fixed income ETFs in retail client portfolios, according to the statement.

Guggenheim is the eighth-largest U.S. ETF issuer with $11.7 billion in assets under management as October 24, according to Index Universe data. Popular Guggenheim ETFs include the Guggenheim China Small-Cap ETF (NYSE:HAO), which has over $214 million in assets under management and the Guggenheim Multi-Asset Income ETF (NYSE:CVY), which has almost $780 million in AUM. The firm also owns a suite of popular equal-weight ETFs that were formerly branded under the Rydex name.

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