Exchange-traded funds’ appeal to investors is soaring, so much so that 62% of participants in a new survey by Charles Schwab said they can see putting their entire portfolios into the products. Half of these said they could be fully invested in ETFs within the next five years.
ETF investors are eager to grow their holdings, the survey found. Sixty-one percent increased their allocations to ETFs in 2025, and 75% appear very likely to buy an ETF in the next two years.
Investors are also confident in their use of ETFs, with many planning to put more money into the products in response to anticipated market and economic trends.
The survey found that two-thirds of ETF investors plan to add both index ETFs and active ones to their portfolios over the next year. Many, too, are interested in exploring specialty product types and niche asset classes.
Interest in fixed income remains a focal point, with 40% of ETF investors planning to increase their fixed income allocations. A year-over-year comparison shows that more ETF investors want to be in fixed income because they anticipate a high-interest rate environment for the foreseeable future.
Overall, they expect to fund new ETF investments by selling mutual funds, individual stocks and bonds and by investing new money, for example, new cash or contributions not yet invested.
ETFs’ Appeal
ETFs are playing a dual role in investor portfolios, according to Schwab. They serve as both low-cost building blocks and a flexible entry point for exposure to more specialized areas.
Ninety-four percent of surveyed investors agreed that ETFs help them keep costs down within their portfolios. Fifty-three percent described their portfolio allocations as mostly core with some tactical/niche ETFs.
About half said ETFs allow them to dip their investing toes into more niche or targeted strategies separate from their long-term portfolio, or to invest in asset classes they normally would not have access to.
Two-thirds of survey participants reported that they are new to ETFs, having started investing in the products within the past five years.
“The world of investing is undergoing a rapid transformation as individual investors gain access to new asset classes, investing strategies and vehicles,” David Botset, head of strategy, innovation and stewardship at Schwab Asset Management, said in a statement. “ETF investors are at the forefront of this evolving landscape.”
Botset noted that ETFs now outnumber individual stocks in the United States.
Logica Research conducted the online survey at midsummer among 2,000 individual investors 25 to 75 with at least $25,000 in investable assets, 1,000 of whom have bought or sold ETFs in the past two years and 1,000 of whom have never bought or sold ETFs or have not done so within the past two years.
How Investors Choose ETFs
Total cost remains the top factor that 59% of investors consider when selecting ETFs, according to the survey. It is followed by the reputation of the provider, cited by 55% of respondents; historical returns and portfolio manager track record, both cited by 53%; and how well an ETF tracks to its index, cited by 52%.
“Investors understand that keeping costs low has significant impacts on returns and long-term outcomes,” Botset said. “Even as investors become interested in specialized strategies and novel asset classes, they are focused on keeping costs down across their portfolios.”
Whether ETF investors prefer indexed or actively managed ETFs depends on the asset class. Sixty-three percent said they would consider buying an actively managed ETF when it has the potential to outperform a traditional index fund, while 51% said they would do so to gain access to alternative strategies or asset classes not typically available to them through index ETFs.
New ETF Investors
New ETF investors, those who started investing within the past five years, tend to be younger, the survey showed. Forty-nine percent are millennials, compared with 34% of tenured ETF investors. Despite their relative newness to the category, millennials have already dedicated a similar share of portfolio to the products as their more tenured counterparts.
Meanwhile, 48% of non-ETF investors in the survey said they are likely to consider buying ETFs in the next two years. Botset noted that as more investors learn about ETFs’ potential benefits, they are fueling record growth for the category and continued product innovation.
For their part, millennials expect to increase ETF investments more than other generations in the next year and are the most likely to consider putting their entire portfolio in ETFs. They are also more interested in investing in a broad range of specialty ETFs, including spot cryptocurrency and single stock ETFs.
Millennial ETF investors are also enthusiastic when it comes to the markets and how they approach investing. Sixty-nine percents ay they have the skills to outperform the market, compared with 53% of Gen Xers who say this and 36% of baby boomers.
Fifty-four percent of the younger ETF investors say they take a tactical approach to investing, compared with 44% of Gen Xers and 29% of boomers. The latter are much more likely than their younger counterparts to be buy-and-hold investors.
“As more and more complex and niche ETFs come to market, it will be important for millennials, who are more likely to take a tactical approach to investing, to think about their long-term goals and choose products that will help them stay invested through market cycles,” Botset said.
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