ETFs are the go-to investment vehicle for the majority of millennial investors, replacing individual securities as a way for the younger generation to gain access to the various markets.
According to Charles Schwab’s eight annual ETF Investor Study, 91% of millennial investors – those between the ages of 25 through 37 – indicated ETFs are the investment vehicle of choice, 42% of their portfolios are currently in ETFs and 56% said they have already replaced all individual securities int heir portfolios with ETFs.
In comparison, 72% of all ETF investor groups said ETFs are their investment vehicle of choice, 34% of every ETF users’ portfolios are currently in ETFs and 32% of all ETF investors said they have completely replaced individual securities with ETFs.
Millennials Expect to Increase ETF Usage
Looking ahead, nearly 80% of millennial respondents point to ETFs as their primary investment vehicle in the future. Around 74% of millennials surveyed want to increase their ETF investments in the next year and 54% indicated they would consider placing their entire portfolio in ETFs in the same time frame.
“It is striking after eight years of conducting this study to see investor appetite for ETFs still going strong,” Heather Fischer, Vice President, ETF & Mutual Fund Platforms at Schwab, said in a note. “Within a decade, we’ve seen ETFs grow to the point where investors now see them as a foundational investment vehicle. While this sentiment is particularly pronounced among Millennial investors, it is reflected strongly across generations and genders.”
The recent volatility has also highlighted the importance of ETFs among various investor groups. Over 80% of all investors surveyed indicted they believe ETFs provide the flexibility to quickly adapt to short-term changes, with 67% revealing they expect to allocate more to ETFs during periods of market volatility. Furthermore, 73% of investors showed they were interested in looking into smart beta strategies to ride out periods of market volatility. Millennials were also the most likely age group to swap around ETFs during periods of volatility.
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