Exchange Traded Funds continue to make inroads in the investment portfolios of wealthy investors.
A Spectrem study from the fourth quarter of 2013 – Asset Allocation, Product Ownership and Perception of Providers – shows that across all wealth segments, investment in ETFs is growing, and in some cases, doubling over a four-year period.
The study examined the investment portfolios of investors from three different wealth segments – Mass Affluent (a net worth between $100,000 and $1 million Not Including Primary Residence), Millionaire (a net worth between $1 million and $5 million NIPR), and Ultra High Net Worth (net worth between $5 million and $25 million NIPR).
Among UHNW investors, ownership of exchange traded funds more than doubled from 2009 to 2013. For last year, 52 percent of investors had ownership in ETFs while only 25 percent had ETFs in 2009. The mean value total of the ETFs in 2013 were averaged at $303,000, which was almost half of the $610,000 mean value total for U.S. stock mutual funds owned by 69 percent of UHNW investors.
Younger UHNW investors were most involved in ETFs. Sixty-one percent of UHNW investors aged 44 and under owned domestic ETFs and 52 percent owned international ETFs.
Millionaire investors are not as invested in ETFs as their wealthier counterparts, but interest and investment has grown in the last four years. In 2009, only 22 percent of Millionaire investors were buying ETFs, and in 2013 it was up to 30 percent. Investment in U.S. stock mutual funds actually dropped by the same percentage, from 70 percent to 62 percent, over that four-year period.
The mean value total of Millionaire investments in ETFs averaged $115,000, a little more than half the $228,000 average for U.S. stock mutual funds.