Individual exchange traded fund (ETF) investors are fast becoming a segment of the market that must not be discounted.
First, a study by financial research organization Investment Trends found several facts to support this argument, including:
- Individual investors who don’t work with an advisor allocate around 20% of their portfolio to ETFs
- Individual investors are more loyal to fund providers than investors who use an advisor are
- Only 10% of individual investors use a financial planner before investing; 79% said they invested without the help of an advisor
Jamie Burns for Investment News reports that a survey by Cambridge, Mass.-based Cogent Research LLC also had some interesting findings:
- 49% of self-directed ETF owners recognized provider Barclays Bank PLC of London, compared with just 24% of advised owners
- Not only do individual investors have more brand loyalty, they tend to demonstrate that loyalty with their first ETF provider
We conducted our own survey of ETF Trends readers last month, and the findings were no less interesting:
- 85% of our readers are individual investors and most of them have some or all of their portfolio allocated to ETFs
- Nearly all of them (93%) plan to allocate more of their portfolios to ETFs
- Most of them (80%) don’t use an advisor to manage their portfolios
What does this mean? Individual investors are taking matters into their own hands and educating themselves. While interest in ETFs has been growing among the financial advisor segment of the market, individual investors have taken just as much of a shine to them and providers can no longer afford not to address this growing class of investors.
We found that self-directed investors get 92% of their ETF information from theinternet. Conclusion: there is a huge demand for ETF content, information and tools.
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.