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
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
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
Mintel said in the press release it has been providing data for
38 years to businesses looking to advance and improve their direct
Don't forget to check IndexUniverse.com's ETF Data
2010 Index Publications LLC
. All Rights Reserved.