Jeff Johnson, principal and head of fixed-income product at Vanguard Group, was asked during the Exchange ETF conference in Miami Beach, Fla., how he decides among the various wrappers — such as the mutual fund or ETF wrapper — when evaluating new strategies to bring to market.
Moderator Katie Greifeld, a Bloomberg News reporter and anchor, posed the question during a Feb. 12 session on bond ETFs.
"Well in a lot of ways, Katie, our clients decide, and we're seeing them vote with their feet," Johnson said.
"For many, many years, obviously our initial presence was very strong in mutual funds, and we still care about mutual funds, we still care about our mutual fund investors," he said. "But over time, increasingly what we've seen is that whether it's municipals that we're talking about, indexed or now even active strategies, we're seeing more and more investors gravitate towards the ETF structure."
Increasingly what Vanguard hears from financial advisers in particular "is a real preference for the ETF because of the … flexible approach to trading, the low cost and increasingly they're moving into indexed-oriented vehicles, and they find a lot of those in (the) ETF wrapper," Johnson said.
