Now, a recent study, the first public opinion survey conducted about exchange-traded funds, confirms that popularity, and provides some additional insights into these hybrid new investment vehicles. Exchange-traded funds work like mutual funds, but trade like stocks, and provide investors with lower fee alternatives and more control over tax liabilities. According to results of the study, conducted by the Boston Research Group, the majority of individual investors and financial intermediaries are likely to consider or recommend exchange-traded funds in the future. When asked their perceptions of mutual funds, individual investors and financial intermediaries agree that diversification is the most positive characteristic of mutual funds. Overwhelmingly, intermediaries view capital gains taxes as the most negative characteristic.
Investors view taxes and management fees as most negative.
Individual investors and financial intermediaries agree that the most important key benefits of ETFs are tax efficiency, lower management fees and intra-day pricing. Investors surveyed are aware of either ETFs as a product category, or know of a specific ETF product. As individual investors and financial intermediaries become more educated about the product and the number of product offerings increases, it will be interesting to survey their attitudes and awareness levels again. Exchange-traded funds combine the benefits of both stocks and funds. Like stocks, ETFs are listed on an exchange and can be traded anytime during market hours.