Two-thirds of ETF investors expect to increase
allocation to ETFs in 2019
The majority of ETF investors (61%) expect market volatility to
increase in the next six months, and close to half (44%) say they
will put more money into ETFs as a result, according to the ninth
annual ETF Investor Study by Charles Schwab & Co., Inc., a
survey of 1,500 investors who have bought or sold an ETF within the
past two years.
“After a decade of market gains, ETF investors now see clouds on
the horizon and are planning to use ETFs to help them weather the
storm,” said Kari Droller, vice president of third-party mutual
fund and ETF platforms at Schwab. “It’s clear that ETFs serve a
unique role for investors, as the foundation of a portfolio and
also as a vehicle that enables them to be nimble.”
When asked about the ETF asset classes in which they plan to
invest over the next year, domestic equity ETFs are the top pick
(63% of respondents). For sector ETFs, more than two-thirds of ETF
investors (69%) say technology is their top choice, a sentiment
that is particularly popular among Millennials (74%). As investors
look ahead at choppier markets, nearly three-quarters of those
surveyed say now is a good time to invest in fixed income ETFs.
Top three asset classes for investment
over next year
All ETF Investorsn=1,000
Millennials(age 25-38)n=500
Gen X(age 39-54)n=285
Boomers(age 55-73)n=226
Domestic equity 63% 64%
60% 62% Bonds/Fixed
income 61% 72%
56% 43% Real assets
58% 65% 61%
38%
Top three sectors for investment over
next year
All ETF Investors
Millennials Gen X
Boomers Technology 69%
74% 71% 56%
Financial services 50%
59% 48% 35% Real estate
45% 55%
43% 28%
Fixed Income
All ETF Investors
Millennials Gen X
Boomers
Believes now is a goodtime to invest in
fixedincome ETFs
74% 86%
74% 50%
Volatility and ETFs
Already, 51 percent of respondents say they’ve increased their
allocations to ETFs in the past six months after increased market
volatility, and expectations for volatility are also likely
impacting their plans for the coming year. Among the subset of
investors who anticipate increased volatility, 73 percent expect to
increase their ETF investments in the next year and 37 percent
would consider placing their entire investment portfolio, excluding
cash, into ETFs in the next year.
Impact of volatility expectations on
ETF Sentiment
TotalN=1,000
Investors whoexpect marketvolatility
willincrease in nextsix monthsn=606
Investors whoexpect marketvolatility
willdecrease in nextsix monthsn=71
Investors whoexpect marketvolatility to
staythe same in thenext six monthsn=323
Expect to increase ETFinvestments in next
year
68% 73%
69% 57%
Would consider placingtheir entire
investmentportfolio (excluding cashholdings) in ETFs in
nextyear
31% 37%
20% 21%
ETF enthusiasm continues to grow
The market environment aside, ETF investors continue to look to
ETFs to meet their investing goals. About two-thirds (68%) of all
ETF investors surveyed plan to increase ETF investments in the next
year, up from 54 percent in 2018. Sixty-three percent expect ETFs
to be the primary investment type in their portfolios in the
future, up from 55 percent in 2018.
ETF Sentiment
2018 2019
See ETFs as primary investment type in future
55% 63% ETFs are investment vehicle of choice
72% 79%
ETF Holdings
Percentage of portfolio already in ETFs 34%
36%
Percentage that would go into ETFs if
respondents had another $100,000to invest (average)
48% 54%
ETF Behavior
Expect to increase ETF investments in next year
54% 68%
Would consider placing their entire
investment portfolio in ETFs(excluding cash holdings)
53% 63%
A deeper look by generation: Millennials lead the pack, but
don’t count out Gen X
Millennials maintain their position as the most enthusiastic ETF
investors by generation, but Gen X is not far behind. Forty-two
percent of Millennial portfolios are currently in ETFs, on average,
with Gen X portfolios at 34 percent.
Looking to the future, four in five Millennials and three in
five Gen Xers expect ETFs to be the primary investment in their
portfolios. Millennials are also the most likely to consider
placing their entire portfolio in ETFs in the next year (44%),
compared to 26 percent of Gen Xers and only 9 percent of
Boomers.
ETF Sentiment
All ETFInvestorsn=1,000
Millennials(age 25-38)n=500
Gen X(age 39-54)n=285
Boomers(age 55-73)n=226
See ETFs as primary investment type in future
63% 79% 59%
37% ETFs are investment vehicle of choice
79% 90% 80%
55%
ETF Holdings
Average percentage of portfolio already in
ETFs
36% 42%
34% 24%
Percentage that would go into ETFs
ifrespondents had another $100,000 to invest(average)
54% 61%
53% 40%
ETF Behavior
Increased allocations to ETFs in past six
monthsafter increased volatility
51% 64%
48% 28% Expect to increase ETF
investments in next year 68%
78% 71% 43%
Would consider placing their entire
investmentportfolio in ETFs in next year (excluding
cashholdings)
31% 44%
26% 9%
A discerning eye: ETF investors care about cost, but that’s
not all
ETF investors say total cost, reputation of the ETF provider and
how well an ETF tracks its index are the most important
considerations when choosing an ETF. When evaluating brokerages
that offer commission-free ETFs, investors look for a broad
selection of ETF categories and no additional fees before anything
else.
Extremely important when evaluating
ETFs
Total cost (commissions, expense ratio,
bid/ask spread) 59% Reputation of ETF provider
58% How well it tracks to its index
57%
Extremely important when evaluating
brokerages that offer commission-free ETFs
Broad selection of ETF categories
56% No additional fees (e.g., short-term
redemption fees) 56% Broad selection of ETF
providers 52%
To review the full study, click here.
About the Study
The 2019 ETF Investor Study by Schwab is the ninth installment
of an annual online survey of 1,500 individual investors between
the ages of 25 and 75 with at least $25,000 in investable assets
who have purchased or sold ETFs in the past two years. Conducted by
Logica Research from February 20 – March 4, 2019, the study has
approximately a three percent margin of error. Survey respondents
were not asked to indicate whether they had accounts with Schwab.
All data is self-reported by study participants and is not verified
or validated.
About Charles Schwab
At Schwab, we believe in the power of investing to help
individuals create a better tomorrow. We have a history of
challenging the status quo in our industry, innovating in ways that
benefit investors and the advisors and employers who serve them,
and championing our clients’ goals with passion and integrity.
Disclosures
Through its operating subsidiaries, The Charles Schwab
Corporation (NYSE:SCHW) provides a full range of securities
brokerage, banking, money management and financial advisory
services to individual investors and independent investment
advisors. Its broker-dealer subsidiary, Charles Schwab & Co.,
Inc. (Schwab), and affiliates offer a complete range of investment
services and products including an extensive selection of mutual
funds; financial planning and investment advice; retirement plan
and equity compensation plan services; compliance and trade
monitoring solutions; referrals to independent fee-based investment
advisors; and custodial, operational and trading support for
independent, fee-based investment advisors through Schwab Advisor
Services. Its banking subsidiary, Charles Schwab Bank (member FDIC
and an Equal Housing Lender), provides banking and lending services
and products. More information is available
at www.schwab.com and www.aboutschwab.com.
Brokerage Products: Not FDIC Insured • No
Bank Guarantee • May Lose Value
Investment returns will fluctuate and are subject to market
volatility, so that an investor’s shares, when redeemed or sold,
may be worth more or less than their original cost. Unlike mutual
funds, shares of ETFs are not individually redeemable directly with
the ETF. Shares of ETFs are bought and sold at market price, which
may be higher or lower than the net asset value (NAV).
© 2019 Charles Schwab & Co., Inc., All rights reserved.
Member SIPC
(0519-909F)
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Erin MontgomeryCharles SchwabPhone:
212-403-9271Erin.Montgomery@schwab.com
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