Investors need more information about ETFs Go compare with our comparison table

Investors need more information about ETFs

03 September 2010 / by Rachael Stiles

Knowledge of exchange traded funds amongst the majority of professional and individual investors needs to be improved, according to a new survey by Morningstar.

The survey of UK investors into the appetite, understanding, and use of exchange traded funds found that they need more information; it also investigated the investment preferences of those who do incorporate ETFs into their portfolios.

Commodities, currencies, and other exotic asset classes are among some of the most popular ETFs include, Morningstar reveals; it also found that a significant minority of investors are concerned about counterparty risks in the current economic environment, amid threats of a double dip recession.

When asked whether brokerage fees were a major concern of theirs, investors responded that they are not; rather, access to stable, passive ETF portfolios is important to them.

The respondents who invest in ETFs said that they are trading infrequently at the moment, and, when they trade, are doing so for rebalancing purposes only.

Commenting on the findings of the survey, Morningstar's associate director of European ETF research, Bradley Kay, said: "We were struck by the split between those respondents who really need more information about ETFs and those already familiar with this product's key features.

"Yet even among active investors, we found ETFs are being used in quite a passive way, for example to overweight in a particular asset class and with infrequent trading thereafter."

Considering the patterns that the survey turned up, Mr Kay concludes that there is "ample room" to improve knowledge about ETFs, and to "engage investors and advisers on this investment option."  

© Fair Investment Company Ltd
 

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