Schwab Survey Reveals Strong Investor Preference for ETFs

New investors are overwhelmingly choosing ETFs as their investment vehicle of choice. Between June 13 and June 28, Charles Schwab conducted a comprehensive survey of 2,200 investors for its 2023 ETFs and Beyond Study. The firm chose 1,000 ETF investors, 1,000 non-ETF investors, and 200 “Gen I” for its study. The last group refers to new investors who have been investing since 2020.

In 2020, 71% of investors agreed that ETFs trumped other fund wrappers as their preferred vehicle. They selected the vehicle over options like closed-end funds and mutual funds. In 2022, this proportion increased to 80%, meaning four in five investors across the sampled spectrum prefer them. And 95% are likely to consider purchasing an ETF within the next two years. That suggests that ETFs are poised to continue growing rapidly.

Furthermore, growth of the industry is not just confined to those who have already bought ETFs in the past. The overwhelming majority (95%) of current ETF investors say they’ll buy more going forward. However, almost half of non-ETF investors (48%) say they are likely to purchase one within the next two years. This is up 7% from a year prior. Additionally, portfolio diversification is the use case selected by the majority of this group.

ETF Investors 1

Source: Schwab 2023 ETFs and Beyond Study

With more choices than ever, it’s no surprise that ETFs have exploded in popularity. Overall, 88% of surveyed ETF investors wanted to personalize their portfolios more in 2023. Meanwhile, 78% plan on investing according to their values. There are more than 3,000 ETFs listed in the U.S. alone as of November 2023. Those funds cover countless asset classes, sectors, themes, and factors.