ETFs Gaining Popularity in Alternatives Universe

Though advisers are more likely to choose mutual funds over exchange-traded funds (ETFs) to access alternatives, ETFs are catching up.

Among advisers who currently access alternatives, 29% expect to increase ETF use, Cogent Research’s Alternative Investment Trends 2012 report found. The majority of investors (78%) still prefer mutual funds over ETFs (58%), but just 17% plan to increase their use of mutual funds.

Investors who are not currently utilizing ETFs to meet alternative investment needs are almost twice as likely as mutual fund non-users to begin doing so over the next two years (17% vs. 9%).

“Advisers continue to flock to ETFs that access alternative investments for the same reasons they seek this vehicle in traditional asset classes—cost efficiency, liquidity and transparency,” said Steven Sixt, senior project director and study co-author.

The 2012 Alternative Investment Trends report surveyed 1,741 U.S. retail investment advisers via the Web in March 2012.

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