Tenth Edition of Schwab’s ETF Investor Study Shows Strong and Growing Appetite for ETFs

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.