E*TRADE Study of Experienced Investors Bucks the Traditional Understanding of ETF Use
November 16 2016 - 4:05PM
Business Wire
Traditionally thought of as buy-and-hold
investing products, in reality, many ETFs are created to be—and
exclusively used as—vehicles for active traders
E*TRADE Financial Corporation (NASDAQ: ETFC) today announced
results from the most recent wave of StreetWise, E*TRADE’s
quarterly tracking study of experienced investors. Results indicate
that many investors do not equate ETFs with long-term
investing:
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- Two out of five investors believe ETFs
are better suited for short-term trading than long-term
investing.
- Only about one in four investors
believe ETFs are entirely or mostly better suited for long-term
investing over short-term trading.
- Millennials are more likely than
Boomers to gravitate towards the less popular, yet more
opportunistic ETFs like foreign currency, derivative, and inverse
ETFs.
- The top three types of ETFs selected by
the total surveyed population remained consistent q/q with U.S.
market index ETFs, dividend ETFs, and sector- and industry-specific
ETFs.
“While ETFs are traditionally associated with long-term
investing solutions that mirror indexes, the data suggests a far
more nuanced picture,” said Rich Messina, SVP of Investment Product
Management at E*TRADE Financial. “Many investors are also using
ETFs opportunistically for short-term trading strategies.
Additionally, as these products are increasingly being developed to
serve a wide variety of purposes, investors are wise to research
them closely to learn how they might fit into their long-term
investing and short-term trading goals.”
Mr. Messina offered the following observations on ETF
strategies:
- U.S. market index ETFs remain
popular for investors and traders alike. U.S. market index ETFs
remain the most popular ETF sector for the second straight quarter,
according to the survey. These ETFs often serve as the core
foundation of a balanced portfolio, offering investors broad access
to the U.S. market, and often come with relatively low expense
ratios. However, while U.S. market index ETFs are often used as
passive vehicles, they are also among the most frequently traded,1
favored by active investors for their liquidity and
efficiency.
- ETF usage is not either/or.
Three out of five investors feel ETFs are either somewhat long-term
or somewhat short-term vehicles, which suggest many may be
employing a hybrid strategy, in which they utilize passive ETFs to
capture general market returns, as well as vehicles like sector,
volatility, and style ETFs to capitalize on short-term themes.
- For younger investors, time is on
their side to seize opportunity. Foreign market index, foreign
currency, derivative, and inverse ETFs are more popular among
younger investors than older investors. This could be attributable
in part to the higher risk tolerances developed by some younger
investors as a result of their longer time horizons.
Visit E*TRADE’s Newsroom for the full Q4’16 StreetWise study
results.
E*TRADE helps investors balance today’s needs with tomorrow’s
goals, through pioneering digital tools coupled with guidance
online and from financial consultants. To learn more about
E*TRADE’s trading and investing platforms and tools, visit
etrade.com.
For useful insight from E*TRADE and third-party investment
professionals, follow the Company on Twitter, @ETRADE.
About the Survey
This wave of the survey was conducted from October 1 to October
10 of 2016 among an online U.S. sample of 954 self-directed active
investors who manage at least $10,000 in an online brokerage
account. The survey has a margin of error of ±3.18 percent at the
95 percent confidence level. It was fielded and administered by
ResearchNow. The panel is broken into thirds of active (trade more
than once a week), swing (trade less than once a week but more than
once a month) and passive (trade less than once a month). The panel
is 65 percent male and 35 percent female with an even distribution
across online brokerages, geographic regions, and age bands.
Referenced Data
If you had to choose, do you believe that ETFs are more
for short-term trading or long-term investing strategies?
TOTAL Q4'16 AGE: 25–34 AGE:
35–54 AGE: 55+ Long-term (Net) 60%
59% 62% 61% Entirely long-term 3% 4% 2% 2%
Mostly long-term 23% 23% 25% 22% Somewhat long-term 34% 32% 35% 37%
Somewhat short-term 28% 29% 28% 26% Mostly short-term 10% 10% 9%
12% Entirely short-term 2% 2% 1% 1%
Short-term (Net)
40% 41% 38% 39%
In what types of ETFs of are you most interested?
TOTAL Q4'16 TOTAL Q3'16 AGE: 25–34 AGE:
35–54 AGE: 55+ U.S. market index ETFs 48% 48% 40% 50%
54% Dividend ETFs 42% 43% 34% 44% 51% Sector- and industry-specific
ETFs 30% 31% 27% 30% 39% Bond ETFs 22% 20% 22% 22% 17% Foreign
market index ETFs 19% 15% 24% 19% 14% Commodity ETFs 18% 19% 19%
19% 12% Style or market cap ETFs 13% 13% 15% 12% 13% Actively
managed or smart beta ETFs 13% 12% 14% 13% 13% Leveraged ETFs 12%
11% 15% 14% 6% Foreign currency ETFs 12% 10% 15% 12% 4% Derivative
ETFs 9% 7% 15% 9% 3% Inverse ETFs 8% 8% 12% 8% 3% ETNs
(exchange-traded notes) 7% 6% 8% 6% 3% Other (i.e., vol. ETFs, ETFs
of ETFs, equal weight ETFs) 2% 3% 3% 1%
3%
“Millennials” defined as age 25–34 //
“Gen X” defined as age 35–54 // “Baby Boomers” defined as age
55+
About E*TRADE Financial and Important Notices
E*TRADE Financial and its subsidiaries provide financial
services, including online brokerage and banking products and
services to retail customers. Specific business segments include
Trading and Investing and Balance Sheet Management. Securities
products and services, including stocks, bonds, mutual funds,
options, and ETFs are offered by E*TRADE Securities LLC (Member
FINRA/SIPC). Managed Account Solutions are offered through E*TRADE
Capital Management, LLC, an investment adviser registered with the
Securities and Exchange Commission. Bank products and services are
offered by E*TRADE Bank, a Federal savings bank, Member FDIC, or
its subsidiaries and affiliates. More information is available at
www.etrade.com.
The information provided herein is for general informational
purposes only and should not be considered investment advice. Past
performance does not guarantee future results. ETFC-G
E*TRADE Financial, E*TRADE, and the E*TRADE logo are trademarks
or registered trademarks of E*TRADE Financial Corporation.
© 2016 E*TRADE Financial Corporation. All rights reserved.
E*TRADE Financial Corporation and ResearchNow are separate
companies that are not affiliated. E*TRADE Financial Corporation
engages ResearchNow to program, field, and tabulate the study.
About ResearchNow
ResearchNow, a leading digital data collection provider, powers
market research insights. They enable companies to listen to and
interact with the world’s consumers and business professionals
through online panels, as well as mobile, digital, and social media
technologies. Their team operates in over 20 offices globally and
is recognized as the market research industry’s leader in client
satisfaction. They foster a socially-responsible culture by
empowering their employees to give back. To find out more or begin
a conversation, visit www.researchnow.com.
1
http://www.marketwatch.com/tools/screener?exchange=Nyse&report=MostActive
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161116006134/en/
E*TRADE Media
RelationsThayer Fox,
646-521-4418thayer.fox@etrade.comorE*TRADE
Investor RelationsBrett Goodman,
646-521-4406IR@etrade.com
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