More than half of Millennials would consider placing their entire investment portfolio in ETFs in the next year, according to a study of US-based clients of Charles Schwab.
ETFs are the investment vehicle of choice for 91% of Millennial investors.
The study, which includes a sub-section entitled “Millennials are Mad for ETFs”, found that ETFs are the investment vehicle of choice for 91% of Millennial investors.
Millennials say 42% of their portfolios are currently in ETFs, and more than half (56%) of investors in that generation say they have already replaced all individual securities in their portfolios with ETFs.
Nearly 80% of Millennials see ETFs as their primary investment vehicle in the future.
Looking ahead, nearly three quarters (74%) of Millennials surveyed expect to increase their ETF investments in the next year and 54% say they would consider placing their entire portfolio in ETFs in the same time frame.
Heather Fischer, Vice President, ETF & Mutual Fund Platforms at Schwab, commented, “It is striking after eight years of conducting this study to see investor appetite for ETFs still going strong. Within a decade, we’ve seen ETFs grow to the point where investors now see them as a foundational investment vehicle. While this sentiment is particularly pronounced among Millennial investors, it is reflected strongly across generations and genders.”
Source: Charles Schwab.
A deeper look: ETFs and the current market environment
The return of volatility to financial markets in 2018 has thus far not dampened investor interest in ETFs – just the opposite. More than 80% of all investors surveyed say they believe ETFs provide the flexibility they need to react to short-term market swings, and more than two-thirds (67%) say they expect to allocate more to ETFs during periods of market volatility. Taking a generational view, Millennials report significantly higher levels of activity and interest in ETFs during periods of market volatility. Additionally, investors overall are more interested in exploring smart beta ETFs during periods of market volatility (73%).
Source: Charles Schwab.
A deeper look: views by gender
Examining the results by gender revealed that more often than not, men and women are closely aligned in their views about and adoption of ETFs. Male and female investors report that about a third of their portfolios are currently invested in ETFs and they plan to increase ETF investments in the next year at about the same rate. Slightly more men (32%) than women (29%) say they would consider placing their entire investment portfolio (excluding cash holdings) in ETFs within the next year. But over the next 10 years, women (56%) are somewhat more likely than men (52%) to consider such a move.
Generational gender differences do exist, however. While 44% of Millennial men describe themselves as experienced compared to 40% of Millennial women, just 26% of all female investors consider themselves experienced compared to 36% of male investors.
Source: Charles Schwab.
A deeper look: Technology fuels ETF growth
A quarter of investors are turning to automated investing platforms or portfolio-building tools designed for self-directed investors to select ETFs, with Millennials and women indicating they are early adopters of these platforms compared to other groups. Just over a quarter of investors rely on their advisors to select ETFs. Baby Boomers and mature investors are much more likely to use an advisor than younger generations, while women are somewhat more likely to work with an advisor than men.
Source: Charles Schwab.
Source: Charles Schwab.