Financial advisors anticipate holding more client assets in exchange-traded funds (ETFs) than mutual funds for the first time by 2026, according to Cerulli Associates. The shift is attributed to ETFs' advantages in taxes, fees, transparency, and liquidity.
Financial advisors expect to hold more client assets in exchange-traded funds than mutual funds by 2026, for the first time, according to Cerulli Associates. ETFs generally have certain advantages over mutual funds relative to taxes, fees, transparency and liquidity, experts said.exchange-traded funds 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.Here’s why tax-loss harvesting can be easier with exchange-traded funds 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. Feeling out of the loop? We'll catch you up on the Chicago news you need to know. Sign up for the weeklyof 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.' Specifically, mutual fund managers generate capital gains within the fund when they buy and sell securities. That tax obligation then gets passed along each year to all the fund shareholders. However, the ETF structure lets most managers trade stocks and bonds without creating a taxable even
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