Fixated on Fixed Income: Millennial ETF Investors Stand out From the Pack for Their Interest, Intentions and Investments in Fixed Income ETFs
- Millennials are more interested in learning about fixed income and plan to invest in fixed income ETFs in the next year. ETF investors are staying the course despite market conditions. Non-ETF investors are likely to purchase ETFs in the next two years. Millennials are heavily invested in ETFs and plan to increase their investments. ETF investors are interested in personalized investment offerings and direct indexing.
- None.
ETF investors continue to show strong interest in personalization; Familiarity with direct indexing grows
Very interested in learning more about fixed income |
|
Average percentage of portfolio invested in bonds/fixed income |
|
Average amount of portfolio invested in equities |
|
Planning to invest in fixed income ETFs over the next year |
||||
Millennials |
|
Millennials |
|
|
Millennials |
|
|
Millennials |
|
|
Gen X |
|
Gen X |
|
|
Gen X |
|
|
Gen X |
|
|
Boomers |
|
Boomers |
|
|
Boomers |
|
|
Boomers |
|
|
All |
|
|
All |
|
|
All |
|
|
All |
|
ETF Investors Stay the Course
Despite a dramatically different investing environment from 2022, cool heads have prevailed among ETF investors this year. Rather than retreat in the face of uncertainties, most are staying the course or finding opportunities to increase investments in ETFs.
ETF investor response to market conditions |
Has not impacted how I invest in ETFs |
I have put more money into ETFs |
I have taken money out of ETFs |
|||
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
|
Market volatility |
|
|
|
|
|
|
High interest rates (2023); Rising interest rates (2022) |
|
|
|
|
|
|
High inflation |
|
|
|
|
|
|
Recession fears |
|
N.A. |
|
N.A. |
|
N.A. |
Geopolitical conflicts (2023); Russia’s invasion of |
|
|
|
|
|
|
“ETF investors have navigated two dramatically different market environments over the last two years, yet their approach to investing and affinity for ETFs has remained extremely consistent,” said David Botset, Managing Director, Head of Equity Product Management and Innovation, Schwab Asset Management. “As we’ve seen historically, Millennials take a unique approach to how they invest, and that holds true for their approach to fixed income – an asset class that has garnered a lot of attention.”
Following the Money
Schwab Asset Management’s long-running study of ETF investors finds that cost remains the top factor when choosing an ETF and overall affinity for ETFs remains high. Eighty percent of ETF investors agree that ETFs are their investment of choice. The overwhelming majority (
The top three asset classes ETF investors plan to invest in over the next year are
New to the Party
In the years ahead, a significant driver of growth for ETFs may come from investors who haven’t yet bought their first ETF. Almost half of non-ETF investors (
Top Reason to Buy ETFs |
ETF Investors |
Non-ETF Investors |
|
Understanding of ETFs |
ETF Investors |
Non-ETF Investors |
ETFs are easy to buy and sell |
|
|
Beginner |
|
|
|
To diversify portfolio |
|
|
Intermediate |
|
|
|
ETFs are low cost |
|
|
Experienced |
|
|
|
ETFs are tax efficient |
|
|
|
“We are at a moment where ETF investing has matured, and many investors are very comfortable using these products to execute their long-term plans. At the same time, there is a contingent of investors who haven’t tried ETFs yet and their interest is on the rise, so there is still significant runway for future education and adoption,” said Botset.
Millennials and ETFs – Next Level Adulting
Millennials’ love of ETFs continues to outpace other generations across several measures. They continue to be more heavily invested in ETFs, with
ETFs are my investment vehicle of choice |
|
Percent of portfolio in ETFs |
|
Significantly increase ETF investments in next year |
|
Extremely confident choosing an ETF |
||||
Millennials |
|
|
Millennials |
|
|
Millennials |
|
|
Millennials |
|
Gen X |
|
|
Gen X |
|
|
Gen X |
|
|
Gen X |
|
Boomers |
|
|
Boomers |
|
|
Boomers |
|
|
Boomers |
|
The Pull of Personalization
Schwab Asset Management continues to see strong interest in more personalized investment offerings among ETF investors, with almost nine in 10 (
Interest in direct indexing – an approach to personalized investing that is quickly gaining traction – remains strong, particularly among younger generations. Eighty-seven percent of ETF investors are familiar with direct indexing, up from
Very likely to personalize portfolios more in 2023 |
|
Extremely important that investments align with beliefs/values |
|
Extremely interested in learning about direct indexing |
|
Likely to invest in direct indexing in the next year |
||||
Millennials |
|
|
Millennials |
|
|
Millennials |
|
|
Millennials |
|
Gen X |
|
|
Gen X |
|
|
Gen X |
|
|
Gen X |
|
Boomers |
|
|
Boomers |
|
|
Boomers |
|
|
Boomers |
|
“The demand for personalized investing continues with Millennials leading the way. Investors’ desire to have more control and alignment of investments with their personal views is a major long-term shift that is still in the early innings,” said Botset. “Demand for personalization will be met by different types of products and solutions to meet different investor preferences – there won’t be one silver bullet solution. The takeaway: expect to see new innovations to help investors get where they want to go in the way they want to get there.”
To read the full report, click Research | About Schwab.
About the Study
Schwab Asset Management commissioned Logica Research to conduct an online survey of 2,200 individual investors between the ages of 25 and 75 with at least
About Schwab Asset Management
One of the industry’s largest and most experienced asset managers, Schwab Asset Management offers a focused lineup of competitively priced ETFs, mutual funds and separately managed account strategies designed to serve the central needs of most investors. By operating through clients’ eyes, and putting them at the center of our decisions, we aim to deliver exceptional experiences to investors and the financial professionals who serve them. As of September 30, 2023, Schwab Asset Management managed approximately
About Charles Schwab
At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.
More information is available at www.aboutschwab.com. Follow us on Twitter, Facebook, YouTube and LinkedIn.
Disclosures:
Investing involves risk including loss of principal. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost. Unlike mutual funds, shares of ETFs are not individually redeemable directly with the ETF. Shares of ETFs are bought and sold at market price, which may be higher or lower than the net asset value (NAV).
Schwab Asset Management™ is the dba name for Charles Schwab Investment Management, Inc. Schwab Asset Management and Charles Schwab & Co., Inc. are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.
Brokerage Products: Not FDIC Insured • No Bank Guarantee • May Lose Value
(1023-3DNO)
View source version on businesswire.com: https://www.businesswire.com/news/home/20231026489412/en/
Christine Underhill Hudacko
Charles Schwab
415-961-3790
christine.hudacko@schwab.com
Source: The Charles Schwab Corporation
FAQ
What asset class are Millennials showing more interest in?
What is the top factor when choosing an ETF?
Are ETF investors staying the course despite market conditions?
What is the percentage of portfolios that ETFs make up?
Are non-ETF investors likely to purchase ETFs in the next two years?
What percentage of Millennials' portfolios are invested in ETFs?