Those who invest in exchange-traded funds are more confident in their ability to save for their retirement and about the economy overall, according to a new survey by Schwab Asset Management.
Overall, ETF investors "demonstrate remarkable calm and steadiness" in an uncertain investment environment, Schwab said of the survey results.
Of the ETF investors surveyed, 97% said they are somewhat or extremely confident they can meet their investing goals and 75% said they are confident their portfolios will recover from a deep recession or an unpredictable event.
Forty-eight percent said volatility has not impacted the way they invest, while 32% said volatility has caused them to invest more in ETFs.
Asked how recession fears have impacted their investments, 54% of ETF investors said they have remained in their investments and 25% said they have expanded their investments.
Schwab surveyed more than 2,000 individuals with at least $25,000 in investable assets. About half of those surveyed were ETF investors.
David Botset, head of innovation and stewardship at Schwab Asset Management, the asset management arm of Westlake, Texas-based Charles Schwab, speculated that ETF investors have a good understanding of how markets work.
“When you’ve got that kind of sentiment behind you where you’re thinking about long-term growth, that element of being distracted by what’s happening over the near term tends to be more of a shrug response than it is a fear response,” he said.
The confidence ETF investors have extends beyond their own investments to the overall economy, the study found. Seventy-three percent of ETF investors said they feel optimistic when they think about the markets compared with 62% of non-ETF investors.
Meanwhile, 49% of ETF investors described themselves as extremely confident that they can meet their desired investing outcomes as opposed to 30% of non-ETF users.
While most investors adhere to the traditional 60/40 spilt, millennials tend to be a bit more overweight in fixed income, the survey found.
Generally, millennials have 54% of their portfolios in equities and 46% in fixed income with 44% planning to increase their fixed-income investments in the coming year.
Despite the increasing number of actively managed products, ETF investors report that only 31% of their overall investments are in actively managed products, although 86% said they are highly or somewhat likely to pursue actively managed ETFs in the next two years.
Botset does not anticipate that actively-managed ETFs will become the majority fund.
“Because costs remain at the top of the list for driving decisions for an ETF, I think it’s hard-pressed to see indexed would be overcome by active,” he said. “But I do think the growth rate of active will continue to be quite high and you’ll see more and more uptick by investors.”
Interest in ETFs remains strong, according to the survey, as 91% of the ETF investors said the investments are a necessary part of their portfolio and 65% said they plan to increase the number of investments in ETFs next year. As a result, they predict that 37% of their overall portfolios will be in ETFs, which is up from the current 27% average, the study found.
“On a going forward basis, ETFs are front and center for all investors,” Botset said. “They’ve demonstrated an affinity for ETFs and they’ve demonstrated a trust in belief that they can provide benefits to perhaps other vehicles that are available.”