Study: Self-Directed ETF Investors Rule

Are you a type-A, do-it-yourself kind of investor? Exchange traded funds (ETFs) may be just what you’re looking for. The ETF market has experienced a surge in interest and more “self-directed” investors are leading the charge, one study has found.

According to Cogent Research, U.S. households with investable assets of at least $100,000 are putting more money into ETFs, reports Jennifer Ablan for Reuters. Additionally, almost two-thirds of U.S. investors bought ETFs without the aid of an advisor.

Last year, global ETF assets pushed past $1 trillion, and in the United States along, assets jumped 46% to $777 billion.

ETF investors are younger than other investors, with an average of 53 and investable assets of $1.1 million, whereas non-ETF purchasers have an average age of 57 with investable assets of $663,000.

Christy White, Cogent Research co-founder, stated that 40% of current self-directed ETF owners plan to increase their use of ETF products, compared to only 26% of advised ETF owners.

Cogent Research has found that The Vanguard Group is “best positioned” to capitalize on self-directed investors because the fund provider brings in a more loyal ETF consumer base. Still, other big names – like Charles Schwab entering the space and iShares partnering up with Fidelity – want a piece of this market, says John Meunier, Cogent research co-founder. Other ETF providers viewed favorably among ETF investors include Claymore, Pacific Investment Management Co. (PIMCO), and PowerShares.

One issue that ETF providers have that mutual fund providers don’t is that mutual fund issuers have a better understanding of who their shareholders are. Because ETFs trade on exchanges, there’s not as much information available to the providers, so studies like this are very key when it comes to getting insight into who, exactly, is putting ETFs to work in their portfolios.

Providers have done a great job of educating investors and working with advisors who use ETFs in their practices. What we’ve found, though, is that there is a huge amount of self-directed investors who make their own decisions and have made a major shift into ETFs. Most of our readers here on ETF Trends are self-directed investors who are highly educated (nearly 45% have an advanced degree) and most of them use the internet for all of their investing research.

ETFs are a great tool for anyone, and it’s thrilling to see the way they’ve caught on with everyone from institutional investors on down to the retail investor.

For more information on ETFs, visit our ETF 101 category.

Max Chen contributed to this article.