Millennials and Gen X driving growth in ETF industry

Feb 22nd, 2017 | By | Category: ETF and Index News

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New survey data for Blackrock Canada shows that Millennials and Gen X investors are leading the charge for future ETF adoption. The “BlackRock ETF Pulse Survey” revealed that 85% of Millennials and 76% of Gen Xers are likely to allocate new investments to ETFs, compared to 44% for their older counterparts, citing the ability to diversify, reduce risk and decrease costs as the top reasons for investing in ETFs.

Younger, tech-savvy investors are driving the ETF growth trend, with 85% of millennials likely to allocate new investments to ETFs

The survey also painted a rosy picture of the future of the ETF industry considering 93% of all current users across ages declared they plan to add to their ETF holdings in the next 12 months, and 40% of non-owners stated they intend to make their first ETF investment during the same time period.

The survey offered insights into some of the distinctions between ETF-owners and non-owners in Canada. Specifically, it found that ETF owners are on average, younger than non-owners. These ETF-owners are less likely than non-owners to use an advisor (68% vs. 79%) and are more optimistic about the Canadian economy on average.

The findings also point to ETF-owners being a more engaged, proactive and confident group. ETF-owners are much more likely to be invested in the markets, with an average of just 19% of their portfolios held in cash (vs. 35% for non-owners), and more satisfied with their portfolio allocations.

“This new type of investor tends to be younger, tech-savvy, and more confident about their finances when it comes to ETFs, meaning that we’re looking for new ways to ensure we’re meeting the needs of this growing base of emerging investors,” said Warren Collier, Head of iShares, BlackRock Canada. “While we’re seeing that Canadians are keen for more information on ETFs, we want to help more investors to understand the important role that ETFs can play in building better portfolios for the future.”

The survey went on to show that while a third of Canadians currently own ETFs, knowledge gaps still persist. Age can be a distinguishing factor when it comes to the sources investors turn to for information. The survey revealed that Millennials and Gen X are much more likely to go to financial websites for information (38% and 41%) compared to Boomers (30%) and Silvers (21%). In contrast, seeking advice from an advisor appears to increase with an investor’s age, with nearly a majority of Silvers (49%) turning to a professional financial advisor, stockbroker or accountant to learn about ETFs, in contrast to 46% of Boomers, 35% of Gen Xers and only 28% of Millennials.

“It’s encouraging to see our next generation of investors taking an active and engaged approach to their financial futures, and we believe that ETFs will be at the forefront of this charge,” added Collier. “Our hope is to extend beyond this group, to help empower all Canadians to better understand their investment options and achieve their investment objectives.”

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