Business & Finance
Business and Finance
Business and Finance
Mon, October 25, 2010 ETFs Might Be Just What Investors are Looking for, Despite Current Lack of Understanding
OMAHA, Neb.--([ BUSINESS WIRE ])--Nearly 20 years after they were first introduced, Exchange Traded Funds (ETFs) can still be considered unfamiliar territory for many investors, according to a new survey released by TD Ameritrade Holding Corporation (NASDAQ: AMTD). Just 34 percent of investors surveyed have heard of ETFs, fewer (25 percent) have a basic understanding of the product, and only 15 percent own ETFs in their portfolios.
"ETFs may fulfill many of the stated needs that investorshave told us are important to them"
But despite the lack of awareness, some ETFs may fit what these investors are looking for, according to the study.When asked about their most important requirements when choosing an investment product, the ability to reduce risk through diversification was ranked the number one feature among the nearly 40 percent of investors who said they are undecided about investing in ETFs. These investors also included lower expenses and fees and ability to trade commission-free in their top-five requirements.
While some investors may just be starting to dip their toes in the ETF pool, the results of educating self-directed investors about ETFs are clear. According to a similar survey among TD Ameritrade clients, 76 percent have heard of or owned ETFs and half (49 percent) have a better understanding of ETFs today compared to one year ago. Additionally, the survey reports that ETFs are being used more frequently in retirement accounts among TD Ameritrade clients, and usage has increased steadily by nearly 60 percent since early 2007.
This understanding was the impetus for TD Ameritradea™s recent unveiling of a new [ ETF Market Center ], which includes a list of over 100 commission-free ETFs a" from a variety of well-known providersa" that have been evaluated and selected by independent experts at Morningstar Associates, LLC, a registered investment advisor and unit of Morningstar, as well as easy-to-use tools and information to help long-term investors build better-diversified portfolios more cost-effectively.
aETFs may fulfill many of the stated needs that investorshave told us are important to them,a said Mike McGrath, director of ETFs, TD Ameritrade. aIta™s a matter of awareness, education and simplifying the selection process. We are committed to helping investors create cost-effective, diversified long-term portfolios, and the more investors know and understand what options are available to them, the more confident theya™ll be in their decision-making. ETFs are still a relatively new asset class, and as awareness continues to increase, we believe the popularity of ETFs will increase as well.a
For investors looking for more information on ETFs or other investments, TD Ameritrade has also made public a free series of online resources including an in-depth [ ETF Webinar ]aimed at helping investors explore the basics of ETFs and the potential they may have in their own portfolios.
For more information on TD Ameritradea™s new commission-free ETF Market Center visit [ www.tdameritrade.com ].
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Before investing in any ETF, carefully consider the investment objectives, risks, charges, and expenses involved. For a prospectus containing this and other important information, please visit the TD Ameritrade Web site or contact a [ TD Ameritrade Client Services representative ] at 800-669-3900. Please read the prospectus carefully before investing.
ETFs are registered investment companies that trade on an exchange like a stock. Commission fees apply. Those who practice frequent dollar cost averaging and active traders may generate trading costs that outweigh any cost benefit. Trading prices may not reflect the actual Net Asset Value of the underlying securities. ETFs can entail risks similar to direct stock ownership and are subject to risks similar to those of their underlying securities, including, but not limited to, market, sector or industry risks, and those regarding short-selling and margin account maintenance.
Past performance of a security does not guarantee future results or success.
Diversification does not eliminate the risk of experiencing investment losses.
Survey Methodology
These results are based on an online survey conducted by Maritz on behalf of TD Ameritrade from May 27 through June 7, 2010. 852 respondents participated in this survey. Respondents were polled from an independent panel managed by e-Rewards. To be eligible for this survey, respondents had to have an account at a brokerage or mutual fund company and at least $25,000 in marketable securities or cash. The margin of error in this survey is 3.4%. This means that in 19 cases out of 20, survey results based on 852 respondents will differ by no more than 3.4 percentage points in either direction from what would have been obtained by seeking the opinions of all eligible investors. Maritz, Inc. and TD Ameritrade Institutional are separate, unaffiliated companies and are not responsible for each other's products and services.
About Maritz
St. Louis-based Maritz is a sales and marketing services company, which helps companies achieve their full potential through understanding, enabling and motivating employees, channel partners and customers. Maritz provides market and customer research, communications, learning solutions, incentive initiatives, rewards and recognition, effective meeting, event and incentive travel management services, and customer loyalty programs. For more information, visit [ www.maritz.com ] or contact us at 1-877-4MARITZ.
About TD Ameritrade Holding Corporation
TD Ameritrade Holding Corporation (NASDAQ: AMTD), through its brokerage subsidiaries,(1) combines innovative trading technology, easy-to-use-and-understand [ trading tools ], investment services, investor education and superior client service to create a market-leading financial services experience. Now home to the award-winning thinkorswim trading technology(2) and the Investools investor education program, TD Ameritrade provides millions of retail investors, traders and independent registered investment advisors with the tools, service and support they need to help build confidence in todaya™s rapidly changing market environment. For more information and resources for journalists, please visit the TD Ameritrade newsroom at [ www.amtd.com ].
(1) TDAmeritrade, Inc., member FINRA ([ www.FINRA.org ]) /SIPC ([ www.SIPC.org ]) /NFA ([ www.nfa.futures.org ]), and TDAmeritrade Clearing, Inc., member FINRA/SIPC.
(2) thinkorswim, prior to joining TDAmeritrade, earned 4.9 stars, the top score, in the category aTrading Technology," and was rated #1 overall online broker in Barron's ranking of online brokers, 3/15/2010. thinkorswim was evaluated versus others in eight total categories, including trade experience, trading technology, usability, range of offerings, research amenities, portfolio analysis and reporting, customer service and education and costs. thinkorswim topped the list in 2006, 2007, 2009, and 2010 with the highest weighted-average score. Barron's is a registered trademark of Dow Jones & Company © 2006-2010.
About Morningstar Associates, LLC
Morningstar Associates, LLC, a registered investment advisor and wholly owned subsidiary of Morningstar, Inc., is a premier provider of independent investment management and consulting services to institutions. It combines world-class resources, rigorous investment processes, and industry and product expertise to design innovative and custom solutions that best serve clients and investors. Morningstar Associates provides investment advisory services on more than $51.9 billion as of June 30, 2010.
The list of commission-free ETFs selected by Morningstar Associates is subject to change without notice. Morningstar Associates does not warrant this information to be accurate, complete or timely. Morningstar Associates is not responsible for any damages or losses arising from the use of this information. Past performance is no guarantee of future results. Use of the list of commission-free ETFs by ETF Market Center users does not establish an advisory relationship with Morningstar Associates. Particular commission-free ETFs may not be appropriate investments for all investors, and there may be other ETFs or investment options that are more suitable. Neither Morningstar Associates nor Morningstar, Inc. is affiliated with TD Ameritrade and its affiliates.
