ETFs Changing the Way Advisors Do Business, According to State Street and Wharton Study
BOSTON--(BUSINESS WIRE)--State Street Global Advisors (SSgA), the investment management arm of State Street Corporation (NYSE: STT) and Knowledge@Wharton, the online business journal of The Wharton School at the University of Pennsylvania, today announced the results of a joint survey exploring the impact of exchange traded products on the financial advisory business.
“By incorporating exchange-traded products into sector rotation, core-satellite, tax management, and portfolio completion strategies, advisors are simultaneously managing costs and risk, which helps underscore their value proposition and strengthen relationships with clients.”
According to the survey of 840 investment professionals, sponsored by State Street and SPDR University, State Street’s new on-line educational resource, 67 percent identified ETFs as the most innovative investment vehicle of the last two decades and 60 percent reported that ETFs have fundamentally changed the way they construct investment portfolios.
“Exchange traded products have become an increasingly vital investment vehicle for financial intermediaries,” said Anthony Rochte, senior managing director of State Street Global Advisors. “By incorporating exchange-traded products into sector rotation, core-satellite, tax management, and portfolio completion strategies, advisors are simultaneously managing costs and risk, which helps underscore their value proposition and strengthen relationships with clients.”
Asked about the greatest potential growth arena for ETFs, 43 percent of advisors cited 401(k) plans and 27 percent singled out actively managed ETFs, a product that has only recently been introduced in the marketplace.
The top five most appealing characteristics of ETFs, as ranked by financial advisors include:
1. Low cost;
3. Intraday trading;
4. Tax efficiency; and
5. Investment style purity.
When asked about the greatest disadvantages of ETFs, 69 percent of the advisors surveyed cited their, “unknown/untested indexes and/or portfolio methodologies” or the, “overwhelming number of choices.”
“The pace at which new ETFs and indices are entering the market is clearly a concern,” said Rochte. “In light of these findings and the increasing importance of understanding index methodologies, the role of responsible product development and educational support cannot be overstated.”
Additional survey findings include:
A report featuring the findings of this joint survey titled, The Impact of Exchange Traded Products on the Financial Advisory Industry is available to financial professionals registered at www.spdru.com.
About State Street Global Advisors
State Street Global Advisors, the investment management arm of State Street Corporation (NYSE: STT), delivers investment strategies and integrated solutions to clients worldwide across every asset class, investment approach and style. With $2 trillion in assets under management at March 31, 2008, State Street Global Advisors has investment centers in Boston, Hong Kong, London, Montreal, Toronto, Munich, Paris, Singapore, Sydney, Tokyo and Zurich, and offices in 27 cities worldwide. For more information, visit State Street Global Advisors at www.ssga.com.
About SPDR® University
SPDR University is a FREE online educational resource dedicated to providing investment professionals with the education and training they need to stay ahead of the market and be precisely in turn with their clients. Log on to SPDR University to access rich educational content and start earning CE credits anytime, from anywhere. Download client-ready materials, webcasts, interactive presentations, succinct materials, audiocasts, and research papers. To register, go to www.spdru.com today.
The Wharton School of the University of Pennsylvania is committed to sharing its intellectual capital through Knowledge@Wharton, the school’s online research and analysis journal. Knowledge@Wharton offers free access to analysis of current business trends, interviews with industry leaders and Wharton faculty, articles based on the most recent business research, conference overviews, book reviews, links to relevant content and a searchable database of more than 2,000 articles and research abstracts. Launched in May 1999, Knowledge@Wharton has evolved into a network of websites, with over 1.2 million subscribers across 200 countries.
About the Wharton School
The Wharton School of the University of Pennsylvania — founded in 1881 as the first collegiate business school — is recognized globally for intellectual leadership and ongoing innovation across every major discipline of business education. The most comprehensive source of business knowledge in the world, Wharton bridges research and practice through its broad engagement with the global business community. The school has more than 4,600 undergraduate, MBA, executive MBA, and doctoral students; more than 8,000 annual participants in executive education programs; and an alumni network of more than 82,000 graduates.
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