The exchange traded fund vehicle is quickly becoming a mainstay in the investment community, gaining popularity as a core component in many diversified portfolios.
Investors show a 22% increase in demand for ETFs, with almost one in ten now holding at least 50% of their portfolios in ETFs, double what it was last year, according to Charles Schwab’s 2013 ETF Investor Study.
“Demand is up across the board, and investors who own ETFs appear to be more interested in the product than ever,” Beth Flynn, vice president of ETF platform management at Charles Schwab, said in a note. “We’re seeing less discussion of ‘if’ and more about ‘how’ investors will buy and use ETFs. We’re seeing an upward shift in sophistication among ETF investors, and a hunger to learn more.”
ETFs continue to attract investment interest as investors point to commission costs and expense ratio fees as critical factors.
About 94% of investors now know that an ETF’s total cost is important. Investors are beginning to show concerns about redemption fees and other hidden fees, with 71% saying it is extremely important, followed by 61% pointing to low expense ratios and 54% indicating trade commissions. [Low Fees Help ETFs Attract Affluent Investors]
Three in ten investors are beginning to show greater interest in learning about ETFs in order to invest in the vehicle, especially for tax purposes.