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Survey Finds Boomers Holding Back on Investing in ETFs

Baby Boomers apparently lag behind their children and elders when it comes to investing in exchange traded funds, according to new survey results of individual investors.

The BlackRock ETF Pulse Survey, which polled 1,000 advised and self-directed individual investors in August 2017, found that only 27% of Boomers invested in ETFs in 2017, compared to 42% of Millennials and 37% of so-called “Silvers” (defined as age 71+).

Millennials saw a 9% jump in ETF adoption between 2017 and 2016, and Silvers had a 15% increase during the same period— but Boomers and Gen Xers had only a 3% increase.

The report notes that overall adoption of ETFs continues on a strong path, as one in three investors now use ETFs, up from one in four in 2016. Moreover, the number of investors planning to buy ETFs in the next year jumped to 62%, from 52% in 2016, with the largest planned increase among Millennials and Gen Xers (at 85% and 64%, respectively). For those who already own ETFs, 88% plan to continue or increase their use of the product, the findings show.

Meanwhile, investors’ ETF usage apparently is evolving as they look to ETFs for diversification, sector and international market exposures at the core of their long-term portfolios. The results show that the key product usage factors include:


  • increased diversification (44%);

  • sector-specific exposure (37%);

  • large-market index exposure (36%);

  • income generation (33%); and

  • broad international exposure (27%).


Moreover, the survey data shows that 34% of investors plan to increase their use of ETFs for long-term investing, with the average holding period increasing to nearly six years, compared to five years in the 2016 results.

ETFs and Mutual Funds?

The findings suggest that the active-versus-passive debate is still a hot topic for investors, but investor respondents don’t see ETFs as either/or propositions. According to the data, 65% of individual investors view a mix of ETFs and mutual funds as the best approach to building a portfolio, while 25% said they are comfortable with just mutual funds and 10% believe there is no need to hold mutual funds if you have ETFs.

In addition, while more investors would prefer to beat the market than simply track it (35% to 26%, respectively), respondents acknowledge that picking winners is difficult and only one in four believe they can successfully choose active managers who can outperform the market.

Despite the inroads that ETFs are making in the retail space, it’s still a different story in the DC plan space. Based on our poll of NAPA Net readers last July, more than half (56%) said they were not using ETFs in any of the programs they worked with, and another quarter said “not really.” The remaining 19% either said that some of their plans used ETFs (17%) or most of them did (2%).

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