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.