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Violetastoimenova | E+ | Getty Images Financial advisors will soon — and for the first time — hold more of their clients’ assets in exchange-traded funds than in mutual funds, according to a new report by Cerulli Associates. Nearly all advisors use mutual funds and ETFs — about 94% and 90% of them, respectively, Cerulli said in a report issued Friday. However, advisors estimate that a larger share of client assets (25.4%) will be invested in ETFs in 2026 relative to the share of client assets in mutual funds (24%), according to Cerulli. If that happens, ETFs would be the “most heavily allocated product vehicle for wealth managers,” beating out individual stocks and bonds, cash accounts, annuities and other types of investments, according to Cerulli. Currently, mutual funds account for 28.7% of client assets and ETFs, 21.6%, it said. More from ETF Strategist: Here’s a look at other stories offering insight on ETFs for investors. ETFs and mutual funds are similar. They’re essentially a legal structure that allows investors to diversify their assets across many different securities like stocks and bonds. But there are key differences that have made ETFs increasingly popular with investors and financial advisors. ETFs hold roughly $10 trillion of U.S. assets. While that’s about half the roughly $20 trillion in mutual funds, ETFs have steadily eroded mutual funds’ market share since debuting in the early 1990s. “ETFs have been attractive for investors for a long time,” said Jared Woodard, an investment and ETF strategist at Bank of America Securities. “There are tax advantages, the expenses are a bit lower and people like the liquidity and transparency.” Lower taxes and fees ETF investors can often sidestep certain tax bills incurred annually by many mutual fund investors. Specifically, mutual fund managers generate capital gains within the fund when…

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Filed under: News - @ December 17, 2024 6:27 pm