The exchange traded fund (ETF) space continues to expand as it attracts greater investor interest and assets. A new ETF Investor Study by Charles Schawb reveals the demand is showing no signs of slowing.
According to the study, 44% of participants plan on investing in ETFs over the next year. Eighty percent of those who already own ETFs say they will increase ETF holdings over the next two years, whereas only 2% believe they will decrease ETF holdings.
While investors have grasped the benefits ETFs offer, investors seem not have a strong understanding of the ETF products. Around 46% of participants labeled themselves as ETF “novices,” and 25% reveal that they do not understand the costs or how to best utilize the investment vehicle. Only 8% consider themselves experts, adding that the greatest challenge is shifting through all the different choices.
“Individual investors are attracted to the efficiency and flexibility of ETFs, but many do not have a solid grasp on how they work,” Beth Flynn, vice president of ETF Platform Management at Charles Schwab, remarked. “As more flavors of ETFs come to market, it is clear that the emphasis on education will be more important than ever.”