ETFs will soon beat mutual funds among financial advisor holdings, report finds

Published On Dec 17, 2024, 1:14 PM

A report from Cerulli Associates indicates that financial advisors are expected to allocate more client assets to exchange-traded funds (ETFs) than mutual funds by 2026. Currently, mutual funds hold a larger market share, but the trend is shifting due to ETFs' advantages such as tax efficiency, lower fees, liquidity, and transparency. ETFs are gaining popularity as they outpace mutual funds in asset growth, with forecasted allocations of 25.4% for ETFs compared to 24% for mutual funds in the near future.

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With the growing preference for ETFs among financial advisors and their significant advantages over mutual funds, including lower fees and better tax efficiency, the trend is likely to continue. This suggests that ETFs will attract more investments, leading to increased demand and potentially driving their prices higher in the market.

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