The study’s results showed that 99 percent of traditional mutual fund investments and 95 percent of ETF investments did not exceed a rate of four reversals or changes in investment direction per year. Furthermore, less than 1 percent of ETF positions averaged more than one investment reversal per month. That’s hardly a sign of ETF day trading!
Furthermore, the study revealed another promising trend: The majority of traditional mutual fund and ETF investments in Vanguard’s study were categorized as buy-and-hold investments (83 percent and 62 percent, respectively). “We found little evidence of speculative behavior in either share structure,” concluded the Vanguard report.
In summary, data does not support the narrative that ETFs are responsible for a massive conversion of the public to day trading. On the other hand, data does support the trend of ETFs being used more and more within a portfolio-building context.
Ron DeLegge is founder and chief portfolio strategist at ETFguide.