David Botset, Head of Equity Product Management at Schwab Asset Management, joined Keith Black, Managing Director of RIA Channel, to discuss Schwab’s annual “ETFs and Beyond” survey, which shows trends in investor attitudes toward ETFs.
Botset notes that younger generations, such as millennials, have embraced ETFs more quickly than older generations. The older generation is more familiar with mutual funds and less familiar with ETFs. However, the older generation may embrace ETFs once they receive further education on their benefits. A second key finding is that costs matter when selecting ETFs.
Two of the most significant changes in the ETF landscape in recent years have been fixed-income ETFs and active ETFs. Especially among millennial investors, fixed-income ETFs are attracting growing interest in asset flows as well as investor interest in educating themselves on these funds.
Both ETF and non-ETF investors are interested in learning more about active ETFs. These funds are viewed as attractive based on their tax efficiency, tradeability, lower expenses, and access to active management. As the breadth of ETF investment objectives widens, investors are increasingly able to personalize their portfolios toward ESG-based or thematic investments. A majority of millennial investors believe that it is extremely important that their investments align with their beliefs and values.
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