Exchange-traded funds do not turn long-term investors into speculative day traders, according to a new Vanguard research paper.

In fact, the paper revealed 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 observed high trading volume activity among ETFs.

While the study did uncover 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. The study’s analysis of trading behavior found that people in these three groups tend to trade more often, regardless of which investment vehicle they choose.

“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,” stated Joel Dickson, one of the study’s authors and a principal in Vanguard’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.”

Vanguard 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 Vanguard index funds from 2007 through 2011.

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