If you’re an active follower of my Blog posts, (thank you), you already know that I’m a huge advocate of simplification: Tuning out the noise and focusing on what’s really important. The world of investing is a crowded one, and it’s especially growing within the exchange traded fund (ETF) space. They have low overall costs and give people the ability to invest in all kinds of markets. With one fund you can access broad markets like the S&P 500 or specific geographies like China or even industries like biotechnology. A recent survey by BlackRock and Fidelity confirmed that more investors are using ETFs in their portfolios.
It’s funny because I’ve been working in the ETF business for the past twelve years, first as a financial advisor and also here at BlackRock, and no one – friends, family and acquaintances – has ever struck up a conversation with me about ETFs. I’m usually the one who brings it up when people ask me what investment vehicles they should consider. But a couple of weeks ago my cousin Kristin, a professional woman in her early thirties, told me that she rolled over a 401(k) from a former employer and invested the bulk of it in ETFs. I couldn’t help but think “Finally!”
Millennials seeking ETFs
It seems my cousin isn’t the only younger investor who is taking this route. The survey found that investors aged 25-49 are more likely to use ETFs versus those over 50. And while more men hold ETFs than women, the balance may be shifting. Specifically, 17% of men who don’t use ETFs said they will at some point, versus 26% of women who don’t use ETFs who said they plan to in the future.
Investing like the pros
Whether it’s knowing what tennis racket your favorite player will be using at the French Open or which brand of skis Lindsey Vonn uses, we all like to emulate the professionals. With ETFs, anyone can invest like a professional, with access to an investment vehicle that aims to make investing easier, simpler and more efficient. Today, more financial advisors (75%) use ETFs than individual investors (32%) but both groups say they intend to increase usage over the next three years.