Schwab Asset Management recently released its “ETFs and Beyond” survey, and although stocks are in a bear market this year, the study revealed a slew of encouraging news for the exchange traded fund industry and investors.
The Schwab survey indicated that 80% of investors view ETFs as their preferred investment vehicle while ETFs are currently found in a third of portfolios, confirming there’s still plenty of room for growth.
“ETF investors have continued adding ETFs to their portfolios at a strong clip over the last ten-plus years. This speaks to the strengths of these products and their ability to deliver exposures, cost effectiveness, tradability, and tax efficiency investors seek through multiple market cycles,” said David Botset, managing director, head of equity product management and innovation, Schwab Asset Management. “Sustained interest among current ETF investors combined with interest from those who have never invested in ETFs is a very promising sign for more growth ahead.”
Obviously, that’s good for the industry at large, but among specific products, some are more apt to benefit than others. For example, the Invesco NASDAQ 100 ETF (QQQM) is an ETF with strong credentials because it fits in with some traits of ETF investors, including investing for the long term and prioritizing fees. QQQM charges just 0.15% per year.
“ETF investors largely stayed the course with their ETF investments during the first half of 2022 despite a very challenging market environment. About half of ETF investor respondents said that market disruptions — including market volatility, rising interest rates and high inflation — did not impact how they invested in ETFs. Nearly one-third put more money into ETFs in response to these disruptions and around one-fifth took money out of ETF,” according to Schwab.
The Schwab survey also confirmed what many advisors and investors already know: Values-based investing is a priority for Millennial investors.
“Millennial ETF investors show greater levels of interest in aligning their investments with their personal beliefs and values and more of them say they will personalize their portfolios further in 2023. Accordingly, Millennials are more interested in newer approaches to investing that allow for the expression of personal preferences like ESG, thematic investing and direct indexing compared to other generations,” added Schwab.
That’s potentially encouraging for ETFs such as the Invesco ESG Nasdaq 100 ETF (QQMG), which is the environmental, social, and governance counterpart to the aforementioned QQQM.
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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.