Investors Aim to Expand ETF Holdings, Want to Customize: Schwab Study

What You Need to Know

More than 40% of non-ETF investors expect to buy ETFs in the next two years, the survey says.
ETFs represent a growing portion of investors’ portfolios.
A majority of ETF investors want greater ability to personalize their holdings.

Exchange-traded fund investors expect the products to comprise a larger part of their holdings in the future, and they show interest in exploring other investments that allow for better portfolio customization, according to a new Schwab Asset Management study.

The report, “ETFs and Beyond,” noted that ETF holders have kept buying through this year’s bear market, high inflation and rising interest rates, and found many non-ETF investors expect to join their ranks eventually.

Eighty percent of ETF investors surveyed named ETFs their vehicle of choice, an increase from 71% in 2020, the firm said. ETFs now account for 33% of ETF investor portfolios, compared with 27% five years ago, and ETF investors expect these products to comprise 40% of their holdings in the next two to five years.

Schwab reported that 93% of ETF investors expect to buy ETFs in the next two years, while 41% of non-ETF investors indicated they’re likely to do so as well.

“ETF investors have continued adding ETFs to their portfolios at a strong clip over the last 10-plus years. This speaks to the strengths of these products and their ability to deliver exposures, cost effectiveness, tradability and tax efficiency investors seek through multiple market cycles,” David Botset, Schwab Asset Management managing director, head of Equity Product Management and Innovation, said in a statement.

“Sustained interest among current ETF investors combined with interest from those who have never invested in ETFs is a very promising sign for more growth ahead,” he said.

Roughly half of ETF investor respondents said this year’s market disruptions didn’t affect their ETF investing, while nearly a third invested more and a fifth decreased their ETF investments, according to the survey.