Are there too many exchange-traded funds on the market? When asked, the majority of investors are saying no.
In fact, two-thirds of the investors say there is room for more ETFs, according to the 2014 ETF Investor Study, released Thursday morning by Charles Schwab.
Michael Iachini, managing director of ETF & mutual fund research for Schwab and a certified financial planner, said this is especially interesting considering the perceived proliferation of ETFs on the market today.
“Investors are saying that markets are changing, environments are changing, and they need ETFs to keep up with that,” Iachini said. “That was the number one cited reason for why they’re comfortable with there being more ETFs out there.”
More ETFs also means more competition and lower prices, which is good for the fee-conscious investor.
Those in the survey that didn’t want any more ETFs noted that there are too many choices and products out there right now.
“The ones who say there are too many — and they’re in the minority anyway — are just saying ‘Boy, it’s tough to sort through.’ So that’s what we need to do, is help them sort through the huge number of ETFs out there.”
This means Schwab needs to help investors sort through ETFs to find the ones that make sense for them, as it currently does with its ETF Select List, Iachini said.
The study is based on an online survey of more than 1,000 individual investors ages 25 to 75 with at least $25,000 in investable assets and who have purchased ETFs in the past two years and/or are considering purchasing ETFs in the next two years.
Having done similar surveys since 2011, Schwab is starting to notice trends, Iachini said. The percentage of assets in ETFs has risen over the past few years. The average from this year’s study is around 18% of an investor’s assets, up from 16% last year.