There is a tremendous opportunity for providers of exchange traded funds (ETFs) to grow total assets for one simple reason—most potential retail investors have never heard of them, according to Mintel Comperemedia. The firm's latest research finds more than six in 10 investors say they don't invest in ETFs simply because they "don't know what they are"— and that number was the same for the higher income households that are most likely to be investors.
"Investment companies have a long way to go in getting the word out about ETFs," Susan Menke, vice president and behavioral economist at Mintel, says in a statement. "On the other hand, it does show that there is tremendous growth potential in this market."
Even investors who currently own ETFs don't feel entirely comfortable with their level of knowledge about the products. Mintel's data shows that only about half (54%) of ETF owners feel they are "very knowledgeable" when it comes to ETF investing. It seems owners of both mutual funds and individual stocks are even more befuddled, with only 17% of existing investors in each of these categories reporting they feel comfortable with investing in ETF products.