Tenth Edition of Schwab’s ETF Investor Study Shows Strong and Growing Appetite for ETFs
March 18 2021 - 8:30AM
Business Wire
Many Non-ETF Investors Ready to Give ETFs a
Try
ETF investors surveyed see the share of ETFs in their portfolios
growing to 38% over the next five years, up from 29% today. Nearly
all ETF investors (94%) say they are likely to purchase ETFs in the
next two years. Notably, nearly half of the non-ETF investors
surveyed (45%) say they are likely to purchase ETFs in the next two
years. The findings come from the tenth edition of the ETF Investor
Study by Charles Schwab & Co., Inc.
“Over the decade we have conducted this study, ETF investors’
appetite and affinity for ETFs has grown dramatically. They feel
much more knowledgeable and confident in their abilities to use
these products to help achieve their financial goals,” said David
Botset, SVP of Product Strategy for Charles Schwab Investment
Management, Inc. “This year we also asked non-ETF investors about
their interest in ETFs. At a time when individual investors are
particularly engaged in the markets, it is interesting to see that
a significant pool of investors who have never dipped a toe into
the world of ETFs are interested in adding these products to their
portfolios.”
Top reasons non-ETF investors who are
likely to consider buying ETFs might do so
To diversify portfolio
60%
ETFs are easy to buy and sell
49%
ETFs are low cost
34%
For tax efficiencies
28%
Top reasons non-ETF investors who are
unlikely to consider buying ETFs will refrain from buying them
Don’t understand enough about ETFs
46%
Happy with current investment portfolio
and not interested in ETFs
32%
Prefer mutual funds
17%
ETFs are too risky / ETFs are too
complicated
10%
As in years past, Millennials continue to outpace Gen X and Baby
Boomers in ETF adoption, though Gen X is not far behind. Over the
next year, 29% of Millennial ETF investors plan to significantly
increase investments in ETFs, compared to 23% of Gen X investors
and 9% of Boomer investors. Millennials estimate that in five
years, 43% of their portfolios will be in ETFs, compared to 39% for
Gen X and 29% for Boomers.
When it comes to specific ETF preferences, ETF investors point
to actively managed ETFs, market cap index ETFs and fixed income
ETFs as the top categories that they feel will add value in helping
them reach their investment goals. Active semi-transparent ETFs are
beginning to attract investors’ interest, with 16% saying they plan
to invest in these specialty ETFs over the next year.
ETF Investor Evolution
The proportion of ETFs in investors’ portfolios increased by
about 50% over the last decade, growing from average allocations of
19% to 29%. In 2015, ETF investors predicted that 25% of their
portfolios would be in ETFs in five years – a prediction that
turned out to be short. They ended up with 29% of their portfolios
in ETFs in 2020, and they now expect that to grow to 38% by
2025.
Investors feel much more confident when it comes to making
decisions about ETFs. In the latest study, 41% of investors say
they are extremely confident in their ability to choose ETFs that
can help achieve their investment objectives compared to just 18%
in 2015. Similarly, 77% of ETF investors consider themselves
experienced or intermediate when it comes to their understanding of
ETFs, compared to 57% in 2015.
“Education is a key ingredient to success in all aspects of
investing, so it is very exciting to see the evolution that has
taken place with ETF investors’ familiarity and comfort with ETFs,”
said Botset. “Certainly the myriad strengths of ETFs – from tax
efficiency, to low fees, to transparency – have paved the way for
investors to adopt them as foundational building block components
of an investment portfolio.”
About the Study
Charles Schwab & Co., Inc. (Schwab) commissioned Logica
Research to conduct an online survey of 2,000 individual investors
between the ages of 25 and 75 with at least $25,000 in investable
assets who are aware of ETFs. Conducted from November 9 – November
29, 2020, the study has a 3% margin of error at the 95% confidence
level. 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 Charles 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.
More information is available at www.aboutschwab.com. Follow us
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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. CSIM and Schwab are separate but affiliated
companies and subsidiaries of The Charles Schwab Corporation.
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).
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Erin Montgomery Charles Schwab Phone: 212-403-9271
Erin.Montgomery@schwab.com
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