Exchange-traded funds (ETFs) are “here to stay,” according to 81 percent of respondents to the 2012 ETF Investor Study by Charles Schwab, an online survey of more than 1,000 individual investors between the ages of 25-75 with at least $25,000 in investable assets and some familiarity with ETFs.

Exchange-traded funds are “here to stay”, reveals survey, but the need for education persists with 45% of private ETF investors still calling themselves novices.

But the need for education persists, with 45 percent of respondents still calling themselves novices when it comes to understanding these products.

Beth Flynn, vice president of ETF platform management at brokerage Charles Schwab, said: “It’s very exciting to see investors rally enthusiastically around ETFs as an essential part of their investing toolbox – but now we need to make sure that their knowledge about the use of ETFs fully matures as well.”

Flynn added: “Most investors generally understand that ETFs tend to offer diversification at a low-cost, but many still need more insight and education on how best to use them, the risks involved and potential tax implications.”

Investors in the study signalled that their usage of ETFs will broaden in the future. Forty-one percent plan to invest more in ETFs in the coming year, with sector and equity funds topping the list as the types of ETFs under consideration. Energy, healthcare and technology are the sector funds investors are most interested in buying.

Investor enthusiasm for ETFs carries through to retirement accounts. Of those surveyed who have an employer-sponsored retirement account, 55 percent want the ability to access ETFs through them. Only 12 percent said they can select ETFs through their employer’s retirement account now.

Cost is the number one factor investors look at when selecting ETFs, according to the survey. Respondents also cited reputation of the fund sponsor and performance history of the ETF as the other two extremely important criteria they consider in making their investment decision. On cost, investors surveyed said they pay most attention to expense ratios, followed by trade commissions.

While 39 percent claim to be better versed in ETFs than they were last year, there are plenty of investors who still say they do not know enough to make that initial ETF investment. Fifty-three percent of investors who are considering but have not yet purchased an ETF claim that their lack of understanding is the main reason they have not done so.