Contrary to what some some critics of exchange-traded funds believe, ETFs investing does not promote excessive trading, according to a new study by Vanguard.

Instead, the study concluded that people who trade ETFs frequently tend to trade all their investments more often than the general population of investors. The study also noted that ost Vanguard investors have a buy-and-hold philosophy regardless of the type of investment.

Vanguard studied 381,236 investors with more than 36,000 ETF holdings and 507,326 mutual fund positions between 2007 and 2011. Vanguard limited the survey to those with IRAs, Roth IRAs and taxable investment positions, eliminating investors such as institutions and trusts.

The survey results come at a time when many experts warn that ETFs, unlike mutual funds, entice investors into trading them frequently. This, critics say, leads to excessive transaction fees and too many investment decisions based on market timing.

"Contrary to conjecture in the media that most ETF investors are trading ETFs for speculative purposes, we found little evidence of speculative behavior in either" ETFs or mutual funds, said the study.

Vanguard defines a reversal as the initial sale of an investment after a buy or the initial buy after a sell. The study shows concluded that 99% of traditional mutual fund investments and 95% of ETF investments do not exceed a rate of four reversals a year, "which hardly paints an image of a day-trading ETF investor," Vanguard said.

The majority of investors in both products (83% for mutual funds and 62% for ETFs) are buy-and-hold, which Vanguard defines as an investment that is held for more than one year and has no more than two investment reversals in any rolling one-year period.

The average holding period is 42 months for mutual funds and 34 months for ETFs. "Although the average holding period for ETFs was shorter than for mutual funds, it was still nearly three years," the study pointed out.

The reason ETFs are bought and sold more frequently is more likely because of the demographics of the investor, the study concluded. The average ETF investor is more likely to be male, to be over 60 years of age (36% versus 30% for mutual funds); and to log onto the Vanguard Web site to check returns daily (36% for ETF owners and 16% for mutual fund holders.) All of these factors point to more active traders.

"Our results clearly indicate that these investors trade more often regardless of whether they invest in the traditional mutual fund or ETF share class," the study said. "Thus, the ETF in many instances is not causing investors to trade; instead, more active investors are seeking out the ETF as their preferred vehicle."

Weighing all the factors, roughly 40% of the trading activity differences between ETFs and mutual funds are explained by investor and account characteristics. The study found that "contrary to what critics claim, the ETF 'temptation effect'-the supposed tendency of investors to trade more after they choose the investment vehicle, because of the availability of intraday trading-is not a likely source of high-volume trading activity among ETFs.

"Although behavior in ETFs was more active than behavior in traditional mutual funds in the Vanguard positions we studied, more than 40% of the variation can be explained simply by correcting for differences in personal and account characteristics between ETF and traditional fund shareholders," the study said.

"We conclude that it is not valid to assume that the so-called temptation effect explains the higher observed trading in ETFs relative to mutual funds, nor is it a reason for long-term individual investors to avoid using appropriate ETF investments as part of a diversified investment portfolio," the study concluded.

-Karen DeMasters