Thanks to $177 billion in net inflows, the U.S. ETF market grew to $2.4 trillion in assets as of the end of October. Richard Messina, senior vice president at E*Trade, said the trend from actively managed funds to passive vehicles like ETFs is showing no sign of stopping.

"Financial advisors don't want to be stockpickers anymore, so they are using ETFs," said Messina. "They have fee-based models so there is very little upside to putting clients into individual stocks."

According to E*Trade's research, two of out five investors believe ETFs are better suited for short-term trading than long-term investing. Meanwhile, only about one in four investors believe ETFs are entirely or mostly better-suited for long-term investing over short-term trading. Three out of five investors feel ETFs are either somewhat long-term or somewhat short-term vehicles.

"This may suggest many may be employing a hybrid strategy, in which they employ both passive ETFs to capture general market returns, as well as vehicles like sector, volatility, and style ETFs to capitalize on short-term themes," said Messina.

In terms of demographics, E*Trade found that Millennials are more likely than Baby Boomers to show interest in ETFs designed for short-term trading, gravitating towards commodity, style, derivative, and foreign currency ETFs. The top three ETFs for the total surveyed population remained consistent quarter over quarter, with U.S. market index ETFs leading the way, followed by dividend ETFs and sector- and industry-specific ETFs.

Finally, investors have been slow to move money from actively-managed bond funds to bond ETFs. Messina said that is changing now that "more fixed-income ETFs are available to the public."

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