More investors are considering exchange traded funds (ETFs) when determining what investments to include in a retirement savings portfolio, according to a special report by the BMO Wealth Institute.
While the report notes that the demand for ETFs is growing worldwide, they remain one of the least understood investment vehicles among Canadians:
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Only 19% of Canadian investors claim to be knowledgeable about ETFs compared to traditional investments such as guaranteed investment certificates (GICs) (58%) and mutual funds (55%).
However, once told about the benefits of ETFs, 60% report that they would add them to their portfolios.
Chris Buttigieg, senior manager, Wealth Planning Strategy, BMO Financial Group, said: "Exchange traded funds have only been around for the last twenty years so it’s understandable that Canadians are still in the process of familiarizing themselves with them. Due to their many benefits, ETFs are a great fit not only for a portfolio in general, but specifically for accumulating wealth for retirement."
Mr. Buttigieg noted that previous studies from BMO have indicated that Canadians are concerned about having enough money for retirement. Therefore it is critical to have a financial plan with a retirement component, as well as a portfolio with a mix of investments that reflect an investor’s risk tolerance, time horizon and liquidity needs.
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