Report: Most Investors Don’t Know ETFs

December 29th at 11:00am by Tom Lydon

A new report has revealed that most investors don’t know what exchange traded funds (ETFs) are. Oddly enough, that bodes well for the growing industry.

According to a new report, most retail investors don’t know what ETFs are. Therein lies a major opportunity for ETF providers to nab even more market share beyond the $1 trillion they’re currently enjoying.

Chris Frankie for Ignites says the report by Mintel Comperemedia also showed a few other things about investors these days:

  • Mintel says its research shows that more than six in 10 investors don’t invest in ETFs because they “don’t know what they are.” That percentage remained the same for households with higher incomes, which are more likely to be investors. [In the ETF Price War, the Winner Is...]
  • Investors in the products are not comfortable with their knowledge level of ETFs. Only 54% of people who own ETFs feel they are “very knowledgeable” about ETF investing.
  • Owners of both mutual funds and individual stocks say they are even less comfortable with the products. A mere 17% of these investors say they are comfortable investing in ETFs.
  • A major reason ETFs are still unfamiliar for investors is because they have not been offered in 401(k) retirement plans. However, the majority of investors are still unfamiliar with these tools. [ETF Assets Hit The $1 Trillion Mark.]

A lot of what the report points out seems to be reflective of the current environment. ETF providers continue to note the need for even more ETF education and have ramped up their own efforts to help investors make decisions.

But most interestingly, this report shows that the ETF industry is only in the earliest stages of growth. That it has reached the $1 trillion mark while the majority of investors remain unaware shows that that $1 trillion is just a drop in the bucket from what it really could be. This is especially true as many of the sidelined investors wade back into the markets, because ETFs will get more than their fair share.

Once the majority of investors understand ETFs…look out!

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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