In a market environment marked by uncertainty, ETF investors are not reacting excessively or nervously regarding their investments. Instead, they demonstrate remarkable calm and consistency, according to the 2024 edition of “ETFs and Beyond,” an annual study by Schwab Asset Management published this year to celebrate the 15th anniversary of Schwab ETFs.
The study shows that, in the face of market factors like volatility, recession fears, and the upcoming presidential elections, ETF investors found opportunities to lean more into ETFs or, more often, opted to remain cautious with their investments in these products.
Furthermore, amid the artificial intelligence boom that swept markets last year, nearly half of ETF investors stated that this trend has not influenced their approach to investing in ETFs, the report adds.
A full 97% of ETF investors are somewhat or very confident in their ability to meet their investment goals, and most feel secure that their portfolios would recover from a deep recession or a “black swan” event (75%).
“We have been studying ETF investors for over a decade, and during that time, they have consistently shown a long-term approach to investing and are not easily spooked by market headwinds. ETF investors can be described as steady, balanced, and fearless,” said David Botset, Managing Director, Head of Innovation and Product Management at Schwab Asset Management.
ETF investors remain committed to the classic 60/40 portfolio, with an average of 60% of their portfolios in equities and 40% in fixed income, though generational differences exist.
Millennials hold 54% of their portfolios in equities and 46% in fixed income. Overall, Millennials continue to show a greater interest in fixed income: 44% plan to increase their fixed-income investments next year, compared to 34% of Gen X and 26% of Boomers.
The primary reasons Millennials invest in fixed income are diversification (57%), income (56%), and reducing the risk level of their portfolios (49%).
ETF investors were more favorable towards various sectors and styles over the past year, and an increasing number plan to invest in cryptocurrencies through ETFs. Interest in U.S. equities, fixed income, and alternatives remained steady.
About 31% of ETF investments are in actively managed types, and 86% of investors responded in the survey that it is highly likely or somewhat likely that they will seek this type of management within the next two years.
