Majority of investors are interested in ETFs, yet fewer than half have discussed them with their financial advisors, survey finds
OREANDA-NEWS. September 30, 2015. John Hancock Investments’ survey of affluent investors found significant investor interest in exchange-traded funds (ETFs). Yet at the same time, investors said they have limited knowledge of the investment vehicle and want to learn more from their financial advisors.
ETFs, which have grown in popularity in recent years, are similar to mutual funds in that they offer investors shares in a pool of stocks, bonds, or other assets. However, unlike mutual fund shares, which are priced only once a day, ETF shares can be bought or sold throughout the trading day on a stock exchange at a market-determined price. ETFs are widely viewed as a low-cost and tax-efficient way to gain market exposure.
The survey found that more than half of investors preferred combining active and passive investment strategies in their portfolios. Investors also cited strong performance, diversification, and low cost as key priorities when selecting investments.
“ETFs, particularly strategic beta ETFs, have become more widely accepted in recent years, yet our research reveals an opportunity for advisors to better educate investors about their benefits,” noted Karen McCafferty, head of marketing for John Hancock Investments. Strategic beta investment approaches, or rules-based index strategies that deviate from market capitalization weights, are often implemented through ETFs.
The survey revealed that nearly half of the respondents rely primarily on a financial advisor for advice; however, advisors do not always take the lead in conversations about ETFs. Forty percent of investors who have discussed ETFs with their advisor initiated the conversation themselves.
Investors are less familiar with ETFs than with other investment vehicles, such as mutual funds. Surprisingly, given the sophistication of this group of investors, only 31% described themselves as somewhat familiar with ETFs, while 37% were not very familiar or not at all familiar. Half said they did not hold any ETFs in their investment portfolios, 32% said they did hold ETFs, and 18% didn’t know.
More than two-thirds of investors surveyed (71%) said they would possibly consider adding ETFs to their portfolios. Fifty-one percent of investors surveyed said they were either very interested or somewhat interested in speaking with a financial advisor about ETFs. Of those who do own ETFs, many invest in those based on U.S. equities (40%), including the S&P 500 Index.
Those who have invested in ETFs say they are taking a long-term view, with 63% saying they have implemented ETFs into their retirement planning. Nearly all surveyed (91%) said that their most important investment goal was ensuring a comfortable retirement.
For more information about John Hancock ETFs, visit jhinvestments.com/etf.
About the John Hancock ETF survey
Research was conducted by KRC Research from August 19–26, 2015, through an online survey of 1,000 U.S. investors who participate in their households’ financial decision-making process, with a household income of \\$100,000 or more and investable assets of at least \\$250,000.
About John Hancock Investments
John Hancock has helped individuals and institutions build and protect wealth since 1862. Today, we are one of America’s strongest and most-recognized brands. As a manager of managers, John Hancock Investments searches the world to find proven portfolio teams with specialized expertise for every fund we offer, then we apply vigorous investment oversight to ensure they continue to meet our uncompromising standards and serve the best interests of our shareholders. Our unique approach to asset management has led to a diverse set of investments deeply rooted in investor needs, along with strong risk-adjusted returns across asset classes. John Hancock Investments managed more than \\$131 billion in assets as of June 30, 2015.
About John Hancock Financial and Manulife
John Hancock Financial is a division of Manulife Financial, a leading Canada-based financial services group with principal operations in Asia, Canada, and the United States. Operating as Manulife in Canada and Asia, and primarily as John Hancock in the United States, the company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents, and distribution partners. Assets under management and administration by Manulife and its subsidiaries were C\\$883 billion (US\\$708 billion) as of June 30, 2015. Manulife Financial Corporation trades as MFC on the TSX, NYSE, and PSE, and under 945 on the SEHK. Manulife can be found at manulife.com.
The John Hancock unit, through its insurance companies, comprises one of the largest life insurers in the United States. John Hancock offers and administers a broad range of financial products, including life insurance, annuities, investments, 401(k) plans, long-term care insurance, college savings, and other forms of business insurance. Additional information about John Hancock may be found at johnhancock.com.
Large company stocks could fall out of favor. The stock prices of midsize and small companies can change more frequently and dramatically than those of large companies, and value stocks may decline in price. A portfolio concentrated in one sector or that holds a limited number of securities may fluctuate more than a diversified portfolio. ETF shares are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Due to various factors, shares may trade at a premium or discount to their NAV in the secondary market, and a fund’s holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions. Brokerage commissions will reduce returns. Please see the funds’ prospectuses for additional risks.
Clients should carefully consider a fund’s investment objectives, risks, charges, and expenses before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, call John Hancock Investments at 800-225-6020 or visit our website at jhinvestments.com/etf. Clients should read the prospectus carefully before investing or sending money.
John Hancock ETFs are distributed by Foreside Fund Services, LLC, and are subadvised by Dimensional Fund Advisors LP. Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP.
John Hancock Advisers, LLC, 601 Congress Street, Boston, MA 02210-2805, serves as investment adviser of six ETFs.