NEW YORK (Commodity Online) : Exchange Traded Fund’s (ETF) continued to attract investors worldwide but very few fully understands the mechanism, according to a study by Charles Schwab Corp. (SCHW).
The study said about 44% of investors plan to invest more in exchange-traded funds over the next year while 80% of those who already own ETFs will invest more in the products over the next two years. Just
Only two percent planned to reduce their ETF holdings while About 8 percent of respondents considered themselves ETF experts.
Survey respondents named cost as the top factor in their choosing to use ETFs. And among costs, investors said they are more concerned with expense ratio than with trade commission.
ETFs, mutual funds that trade like stocks, are a booming business. Once the province of large investors like hedge funds and pension funds, ETFs have fast gained popularity with financial advisers and individual investors in the past several years, helping set off a scramble by firms to get in on the act.
Schwab said about 46% of respondents described themselves as ETF novices, and a fourth of them indicated they don't understand their costs or how to best use them, indicating a demand for education services.
Schwab launched its own family of ETFs in late 2009. It recently offered 14 propriety ETFs. As of Aug. 31, Schwab ETFs had $4.3 billion in assets.
The most common kind of ETF considered for purchase are sector ETFs, followed closely by equity and international ETFs, the survey found. Meanwhile, 34% of respondents reported interest in commodity ETFs, and 26% said they are considering fixed income funds for their next ETF purchase.
