Our fourth-annual ETF investor survey comes at an interesting time for the ETF industry. This year has seen a healthy number of launches and a record number of ETF closures, while total assets continue to grow. We have again polled our sophisticated readership to learn their opinions on the leading issues faced by ETF investors today.
And once again we have partnered with Brown Brothers Harriman—a leading provider of asset-servicing for the global ETF market, with $340 billion in ETF assets under custody as of June 30, 2016—to update the survey to reflect the most relevant core topics and emerging new concerns, arriving at a comprehensive questionnaire of more than 35 questions.
We’ve gathered the results, and the following is a summary of our findings.
When it comes to selecting an ETF, the exact exposure of the underlying index was the most important factor to consider, by a wide margin, selected as the first choice by 38% of respondents. The closest runner-up was expense ratio, at 25%. Meanwhile, the factors deemed least important by respondents were trading spreads and tracking error, selected by 20% and 19% of those polled, respectively. Historical performance and ETF issuer both tied for third place among the least important criteria, at 18%.
Exposure was also the most important factor when considering a new ETF launched within the last year, claiming 45% of the No. 1 rankings. ETF issuer was the second-most-important factor, selected by 23% of respondents as their most important criteria for new ETFs. Interestingly, even more participants—34%—ranked it as their least important criteria. The participants appear to be very split on the question of ETF issuer, at 34%
Only 8% and 10% of respondents selected trading spreads and average daily trading volume, respectively, as their No. 1 criteria for new ETFs. Further, 25% and 22% of respondents ranked trading spreads and average daily trading volume as their least important selection criteria, respectively, falling in behind ETF issuer.