Millennials and Retail Investors Are Changing the ETF Landscape

Small retail investors and the millennial demographic are increasingly investing and engaging in U.S. financial markets, contributing to the greater activity in mutual funds, exchange traded funds, and equities.

According to a recent Broadridge Financial Solutions survey on U.S. investors, millennials, as well as households with the smallest amount to invest, have exhibited a growing in influence from year-end 2017 through June 30, 2020 on the markets.

“We are all witnessing an unprecedented and accelerated democratization of U.S. investing,” Bob Schifellite, Broadridge’s Investor Communication Solutions President, said in a press release. “The signs are undeniable as younger investors, particularly Millennials, grew as a percentage of investors studied from 9% to 14% during this period. Additionally, households with the smallest amount to invest, referred to as the Mass Market, grew in influence from 30% to 38% of investing households. Many are investing using cost-effective ETFs, and more have broader access to low-cost institutional shares, highlighting a changing investing landscape.”

Millennials, or those born between 1981 to 1996, are the fastest-growing generation in numbers of investors studied. Millennials as a percentage of overall U.S. investors expanded from 9% to 14% over the period while Generation X, or those born 1965 to 1980, grew from 24% to 27%.

Meanwhile, Boomers, or those born between 1946 to 1964, dipped as a total percentage of investors from 46% to 43% while the Silent Generation, or those born between 1928 to 1945, also fell as a percentage of investors from 20% to 14%. Nevertheless, the older generations both still make up 57% of the total investors analyzed across the generational segments.

The study also found a growing influencing in the Mass Market group, or households with less than $100,000 in investable assets. The Mass Market group expanded from 30% to 38% of households while Mass Affluent, or households with $100K to less than $1 million, falling from 57% to 51% and High Net Worth, or households with over $1 million in investable money, pulling back from 13% to 11%.

According to the Broadridge study, the Mass Market reflects a growing share of asset ownership, which includes mutual funds, ETFs, and U.S. equities.

“The study highlights trends that are indicative of things to come and present enormous opportunity for asset managers and advisors who adapt to address the emerging needs of investors,” Dan Cwenar, Broadridge’s President of Data and Analytics, said in a press release. “Money is expected to continue to flow into low-cost investment vehicles such as passive and active ETFs and Millennials and Mass Market investors will continue to gain influence as their assets grow.”

Retail investors are also increasingly turning to ETFs to access the markets. The study results show that household ownership of ETFs grew steadily from 30% to 37%. In comparison, the share of mutual funds owned among households increased 2% over the same period. U.S. equities growth was flat.

For more news, information, and strategy, visit the ETF Trends.