ETF Allure: Investors Have Nearly Doubled Allocations to ETFs in Five Years
60% of Millennials Expect to Increase ETF Investments in Next Year
This seventh annual survey explores the attitudes and behaviors of more than 1,200 ETF investors, more than one-third of whom said they would put more than
“It has been fascinating to watch attitudes toward ETFs evolve over the seven years we’ve done this survey,” said
Millennials are ETF obsessed
A generational breakdown of the survey data shows that more than half of Millennials (56%) say ETFs are their investment vehicle of choice, more than any other generation. Sixty percent of Millennials surveyed expect to increase investments in ETFs in the next year, and most (63%) expect ETFs to be the primary investment vehicle in their portfolio in the future.
Nearly 60% of Millennials say they use ETFs to reach long-term goals such as building wealth and saving for retirement, which is consistent with older generations. However, Millennials are much more likely to consider holding only ETFs rather than solely investing in individual securities.
All ETF |
Millennials | Gen X | Boomers | Matures | ||||||
ETFs are investment vehicle of choice | 42% | 56% | 44% | 30% | 23% | |||||
Expect to increase investments in ETFs in next year | 45% | 60% | 48% | 29% | 25% | |||||
Expect ETFs to be primary investment vehicle in the future | 42% | 63% | 45% | 23% | 17% | |||||
Use ETFs to reach long-term goals | 59% | 59% | 58% | 59% | 57% | |||||
Would consider holding only ETFs instead of individual securities | 43% | 62% | 47% | 24% | 23% | |||||
“Millennials continue to lead the charge when it comes to ETF adoption,” said Fischer. “Millennials have grown up with ETFs, and because of this familiarity they seem to be more comfortable than other generations in embracing them as their investment vehicle of choice – and enjoying the benefits of low costs, tax efficiency and transparency.”
ETF investors test the waters with socially responsible investing (SRI)
While only one in 10 ETF investors is currently invested in socially responsible investments, there appears to be growing interest in these strategies. Almost half of ETF investors (46%) believe it is important to invest in socially responsible funds because they want their investments to align with their beliefs, and half (51%) would invest more in these strategies if more SRI product education was offered.
Socially responsible investing has already gained traction among Millennial ETF investors, with almost half (48%) actively seeking out funds that use SRI strategies, and 63% saying they believe SRI strategies can help them reach their investing goals.
All ETF |
Millennials | Gen X | Boomers | Matures | ||||||
Actively seeks out funds that use SRI strategies | 30% | 48% | 32% | 14% | 9% | |||||
It’s important to invest in socially responsible funds because I want my investments to align with my beliefs/interests | 46% | 60% | 50% | 36% | 27% | |||||
I think SRI strategies can help me reach my investing goals | 47% | 63% | 50% | 36% | 23% | |||||
Cost is king
When choosing an ETF, investors prioritize a low expense ratio (62%) and total cost (60%) above all else. When evaluating brokerages, the importance ETF investors place on the ability to trade ETFs commission-free has risen significantly over the last five years. Fifty-five percent said the ability to trade ETFs without commissions or other brokerage fees is the most important or a very important consideration, compared to 38% in 2012.
“ETF investors continue to demonstrate a strong desire for cost-effective ways to meet their investing goals,” Fischer said. “While costs have been trending downward across the industry, it’s clear that ETF investors still keep an eye on what they’re paying.”
About the Study
The 2017 ETF Investor Study by Schwab is the seventh installment of an annual online survey of more than 1,200 individual investors between the ages of 25-75 with at least
About 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.
A leader in the retail ETF market, as of
Disclosures
Through its operating subsidiaries,
Brokerage Products: Not FDIC Insured • No Bank Guarantee •
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 are bought and sold at market price, which may be higher or lower than the net asset value (NAV).
© 2017
(0917-7FUR)
View source version on businesswire.com: http://www.businesswire.com/news/home/20170907005005/en/
Charles Schwab
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