Press Release

Exchange Traded Funds (ETFs) are the investment vehicle of choice for 91% of Millennial investors according to the ETF Investor Study by Charles Schwab & Co., Inc. Millennials say 42% of their portfolios are currently in ETFs, and more than half (56%) of investors in that generation say they have already replaced all individual securities in their portfolios with ETFs. Nearly 80% of Millennials see ETFs as their primary investment vehicle in the future. Looking ahead, nearly three quarters (74%) of Millennials surveyed expect to increase their ETF investments in the next year and 54% say they would consider placing their entire portfolio in ETFs in the same time frame.

ETF Sentiment						2017			2018
Say ETFs are investment vehicle of choice			All ETF Investors			N/A			72%
			Millennials			N/A			91%
See ETFs as primary investment type in future			All ETF Investors			42%			55%
			Millennials			63%			79%
ETF Holdings						2017			2018
% of portfolio already in ETFs			All ETF Investors			28%			34%
			Millennials			36%			42%
Have replaced all individual securities in portfolio with ETFs			All ETF Investors			N/A			32%
			Millennials			N/A			56%
ETF Behavior						2017			2018
Expect to increase ETF investments in next year			All ETF Investors			45%			54%
			Millennials			60%			74%
Would consider placing their entire investment portfolio in ETFs in next year (excluding cash holdings)			All ETF Investors			N/A			31%
			Millennials			N/A			54%

“It is striking after eight years of conducting this study to see investor appetite for ETFs still going strong,” said Heather Fischer, Vice President, ETF & Mutual Fund Platforms at Schwab. “Within a decade, we’ve seen ETFs grow to the point where investors now see them as a foundational investment vehicle. While this sentiment is particularly pronounced among Millennial investors, it is reflected strongly across generations and genders.”

A deeper look: ETFs and the current market environment

The return of volatility to financial markets in 2018 has thus far not dampened investor interest in ETFs – just the opposite. More than 80% of all investors surveyed say they believe ETFs provide the flexibility they need to react to short-term market swings, and more than two-thirds (67%) say they expect to allocate more to ETFs during periods of market volatility. Taking a generational view, Millennials report significantly higher levels of activity and interest in ETFs during periods of market volatility. Additionally, investors overall are more interested in exploring smart beta ETFs during periods of market volatility (73%).

			All ETF			Millennials			Gen X			Boomers			Matures
			Investors			(age 25-37)			(age 38-53)			(age 54-72)			(age 73+)
Say that ETFs provide the flexibility needed to react to short-term market swings			83%			95%			87%			73%			59%
Expect to allocate more to ETFs during periods of market volatility			67%			89%			79%			41%			28%
More interested in exploring smart beta ETFs during periods of market volatility			73%			92%			81%			53%			33%

A deeper look: views by gender

Examining the results by gender revealed that more often than not, men and women are closely aligned in their views about and adoption of ETFs. Male and female investors report that about a third of their portfolios are currently invested in ETFs and they plan to increase ETF investments in the next year at about the same rate. Slightly more men (32%) than women (29%) say they would consider placing their entire investment portfolio (excluding cash holdings) in ETFs within the next year. But over the next 10 years, women (56%) are somewhat more likely than men (52%) to consider such a move.

Generational gender differences do exist, however. While 44% of Millennial men describe themselves as experienced compared to 40% of Millennial women, just 26% of all female investors consider themselves experienced compared to 36% of male investors.

			All ETF
			Investors			Women			Men
Percent of portfolio currently invested in ETFs (on average)			34%			33%			34%
Expect to increase investments in ETFs in next year			54%			57%			54%

A deeper look: Technology fuels ETF growth

A quarter of investors are turning to automated investing platforms or portfolio-building tools designed for self-directed investors to select ETFs, with Millennials and women indicating they are early adopters of these platforms compared to other groups. Just over a quarter of investors rely on their advisors to select ETFs. Baby Boomers and mature investors are much more likely to use an advisor than younger generations, while women are somewhat more likely to work with an advisor than men.

			All ETF
Most of my ETFs are selected...			Investors			Millennials			Gen X			Boomers			Matures
...by an automated investing platform (e.g., robo-advisor)			8%			12%			11%			3%			3%
...using a portfolio-building tool designed for self-directed investors			17%			26%			20%			7%			2%
...by an advisor			29%			22%			22%			36%			48%
...by myself			46%			40%			46%			52%			47%

Most of my ETFs are selected...			Men			Women
...by an automated investing platform (e.g., robo-advisor)			6%			11%
...using a portfolio-building tool designed for self-directed investors			17%			19%
...by an advisor			26%			33%
...by myself			51%			37%

To review the full study, click here.

About the Study

The 2018 ETF Investor Study by Schwab is the eighth installment of an annual online survey of 1,500 individual investors between the ages of 25-75 with at least $25,000 in investable assets who have purchased ETFs in the past two years. Conducted by Koski Research from April 28 – May 15, 2018, the study has approximately a three percent margin of error. Survey respondents were not asked to indicate whether they had accounts with Schwab. All data is self-reported by study participants and is not verified or validated.

About Schwab

At Schwab, we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

Disclosures

Through its operating subsidiaries, The Charles Schwab Corporation (NYSE:SCHW) provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (Schwab), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at www.schwab.com and www.aboutschwab.com.

Brokerage Products: Not FDIC Insured • No Bank Guarantee • May Lose Value

Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost. Unlike mutual funds, shares of ETFs are not individually redeemable directly with the ETF. Shares of ETFs are bought and sold at market price, which may be higher or lower than the net asset value (NAV).

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