When asked why they are likely to consider buying ETFs, top reasons for non-ETF investors were portfolio diversification (60%), ease of buying and selling the products (49%), and their low cost (34%). and tax efficiency (28%).
Meanwhile, the remaining non-ETF holdout investors said they probably wouldn’t consider buying ETFs because they don’t understand enough about ETFs (46%), are satisfied with their current investment portfolio (32%) and mutual funds (17%), and they think ETFs are too risky or complicated (10%).
Overall, despite the continued reluctance of many, investors have become much more confident about making decisions about ETFs. The latest study found that 41% of investors are extremely confident that they can choose ETFs to meet their investment goals, far from just 18% who shared that view in the 2015 survey. Similarly, more than three-quarters (77%) of ETF investors rated themselves as experienced or moderate in their understanding of ETFs, compared with just 57% who said so in 2015.
“Education is an essential part of being successful in all aspects of investing, so it is very exciting to see the familiarity and comfort of ETF investors with ETFs evolve,” said Botset.
The latest survey also found an ongoing trend for millennials to outperform older demographic segments in adopting ETFs. 29% of millennial ETF investors plan to significantly increase their ETF investments. Gen Xer didn’t lag far behind. 23% of ETF investors in this age group said they will increase their allocations, while only 9% of boomer investors said so.