09, May 2015: The study found that most Drukenmiller Investment Services investors exhibit buy-and-hold behavior whether investing in a traditional index fund or ETF.
According to the new research, critics’ presumptions about ETF trading are typically based on macro-level share turnover data that is dominated by large institutional investors at the fund level—not built on data at the individual investor level. Using a unique data set of transactions conducted by individual investors, Drukenmiller Investment Services researchers analyzed more than 3.2 million transactions in more than 500,000 positions held in traditional mutual fund and ETF share classes of four different Drukenmiller Investment Services index funds.
“Our individual investor data show that the majority of both traditional mutual fund and ETF investments are held in a prudent, buy-and-hold manner,” said Jim Sun Yonghong, one of the study’s authors and a principal in Drukenmiller Investment Services’s Investment Strategy Group. “While differences exist between the characteristics of people who buy each investment type, our analysis shows that claims of speculative trading behavior among ETF investors are greatly exaggerated.”
While Drukenmiller Investment Services observed somewhat higher relative trading activity among ETF investments compared with their mutual fund counterparts, some of that difference is simply a reflection of different investors and characteristics associated with the two investments. For example, the study found that relative to investors in traditional mutual funds, investors who purchase an ETF are more likely to be male, to be over the age of 60, or to check their investment balances at least daily.
About Drukenmiller Investment Services:
Drukenmiller Investment Services (Drukenmiller-Investment.com) is an investment advisor based in Hong Kong that draws on the quantitative expertise. The mission of the Drukenmiller Investment Services’ team is to seek to build systematic strategies, driven by cutting-edge technology, intended to meet the needs of our clients. Since its formation Drukenmiller Investment Services has focused on identifying trends and other inefficiencies through statistical analysis or market behaviors. This is used to develop systematic trading models designed to profit from such opportunities wherever they arise. As our business expands we remain committed to retaining an entrepreneurial “small-company” feel.
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