ETFs Unknown To Most, Study Says


More than 60 percent of investors, including high net worth individuals, don't use ETFs because they don't know what they are, according to a new study from the Chicago-based consultancy Mintel Comperemedia. The blind spot amounts to a huge marketing opportunity that is likely to result in double-digit growth for the industry over the next five years, Mintel said.

Just over half of investors who currently own ETFs feel comfortable with their level of knowledge about the products, according to Mintel's data.  Among investors who currently favor mutual funds and individual stocks, just 17 percent said they felt comfortable with investing in ETF products.

"Investment companies have a long way to go in getting the word out about ETFs," Susan Menke, a vice president and behavioral economist at Mintel, said in a press release. "On the other hand, it does show that there is tremendous growth potential in this market."

While assets in U.S.-listed exchange-traded products recently reached the $1 trillion milestone, the results of the Mintel study dovetail with two separate studies from TD Ameritrade and Schwab that showed just 15 percent of retail investors are using ETFs. The first fund, the SPDR S&P 500 ETF (NYSEArca:SPY) was launched in 1993.

ETFs have become known for their flexibility, canvassing diverse swaths of the investment universe, both broad and narrow in a relatively low cost and tax efficient manner. By comparison assets in U.S. mutual funds are now at more than $11 trillion dollars.

"ETFs really only burst on to the scene in the last few years, and obviously have not penetrated well into some potential markets," Menke said. "One reason is that they are not commonly offered in qualified plans such as 401ks, but even those who invest in non-retirement accounts are still quite unfamiliar with the this newer type of investment."

Because ETFs do offer a number of advantages, such as the ability to trade intra-day or to hedge the investment using instruments such as options, it's likely that growth in total ETF assets will continue at the expense of competitive products, like mutual funds.

Mintel said in the press release it has been providing data for 38 years to businesses looking to advance and improve their direct marketing strategies.

Don't forget to check's ETF Data section.

Copyright ® 2010 Index Publications LLC . All Rights Reserved.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , ETFs

Referenced Stocks: SPY



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