Exchange Traded Funds continue to make inroads in the investment portfolios of wealthy investors, according to a Spectrem study.
The report from the fourth quarter of 2013 – Asset Allocation, Product Ownership and Perception of Providers – shows that across all wealth segments, investment in ETFs is growing, and in some cases, doubling over a four-year period.
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The study examined the investment portfolios of investors from three different wealth segments – Mass Affluent (a net worth between US$100,000 and US$1 million Not Including Primary Residence), Millionaire (a net worth between US$1 million and US$5 million NIPR), and ultra-high-net-worth (net worth between US$5 million and US$25 million NIPR).
Among ultra-high-net-worth investors, ownership of exchange traded funds more than doubled from 2009 to 2013. For last year, 52% of investors had ownership in ETFs while only 25% had ETFs in 2009.
The mean value total of the ETFs in 2013 were averaged at US$303,000, which was almost half of the US$610,000 mean value total for US stock mutual funds owned by 69% of ultra-high-net-worth investors.
Younger ultra-high-net-worth investors were most involved in ETFs. Sixty-one percent of ultra-high-net-worth investors aged 44 and under owned domestic ETFs and 52% owned international ETFs.
Millionaire investors are not as invested in ETFs as their wealthier counterparts, but interest and investment has grown in the last four years. In 2009, only 22% of Millionaire investors were buying ETFs, and in 2013 it was up to 30%.
Investment in US stock mutual funds actually dropped by the same percentage, from 70% to 62%, over that four-year period.
The mean value total of Millionaire investments in ETFs averaged US$115,000, a little more than half the US$228,000 average for US stock mutual funds.
