More investors are planning to use ETFs, according to a new study from Charles Schwab.

The survey found that ETFs comprise, on average, almost 20 percent of ETF investors’ portfolios, and individual funds are held by investors for an average of 1.5 years. In addition, 44 percent of individual investors surveyed plan to invest more in ETFs over the next 12 months, and eight in 10 who currently own ETFs say they will invest more in ETFs over the next two years,

Half of ETF owners surveyed say they use these products to access specific sectors or markets. Sector ETFs were cited as the type most frequently evaluated for purchase, followed closely by equity and international ETFs. The results showed 34 percent of respondents have interest in commodity ETFs, and 26 percent say they are considering fixed income funds for their next ETF purchase.

But the study also offers insights on the gaps that still exist in investors’ knowledge about ETFs. Just over 45 percent of investors surveyed call themselves ETF “novices,” and one-fourth of all respondents indicate that they do not understand their costs or how to best use them. Thirty-one percent of all investors say they don’t know how to use ETFs across asset classes, and more than 25 percent know nothing about the difference between actively managed and index-based ETFs.

“Individual investors are attracted to the efficiency and flexibility of ETFs, but many do not have a solid grasp on how they work,” said Beth Flynn, vice president of ETF Platform Management at Charles Schwab. “As more flavors of ETFs come to market, it is clear that the emphasis on education will be more important than ever.”

The ETF Investor Study by Charles Schwab was an online survey of more than 1,000 individual investors with at least $25,000 in investable assets and familiarity with ETFs. The study was designed to gauge individual investors’ attitudes toward and understanding of ETFs, and how or if they would use them as part of their investment portfolios. Nearly two-thirds of all respondents to the survey own ETFs while the remainder plan to invest in an ETF in the next two years.

“Individual investors are simply not satisfied with their own knowledge of ETFs and want to learn more, said Flynn, who noted that Schwab’s education efforts include the ETF Select List that helps narrow product choices, as well as access to online tutorials and research. “This combination of high investor demand for ETFs with low understanding makes an obvious case for more tools and better education across the investment spectrum.” •