BUSINESS WIRE-Even as the adoption of exchange traded funds is surging, a surprising group of investors appears to be holding back.
Boomers, ages 52-70, are in their peak investing years, but they lag behind their children and parents when it comes to using ETFs, according to “BlackRock ETF Pulse Survey” data released by BlackRock Inc.
The survey, which polls advised and self-directed individual investors, found that only 27 percent of boomers invested in ETFs, compared to 42 percent of millennials, ages 21-35, and 37 percent of silvers, ages 71 and older..
“Boomers, who came of age during one of the most extended bull markets in memory, may still be holding onto a stock-picking mentality,” says Martin Small, head of U.S. iShares at BlackRock.
“They may not realize that ETFs are as easy to trade as stocks and available in virtually every market segment imaginable,” Small says. “As a result, many pre-retirees and investors in their early years of retirement may be overlooking the ETF revolution.”
Their children and parents, however, are purchasing ETFs in record numbers. Millennials saw the biggest jump in ownership, with 42 percent compared to 33 percent last year. Silvers also had a strong uptick in ETF adoption, nearly doubling to 37 percent versus 22 percent last year. Usage among women increased to 30 percent from 23 percent.
The survey also reveals continued record adoption of ETFs overall, as one in three investors now use ETFs, up from one in four last year. The number of investors set to buy ETFs in the next year spiked to 62 percent, from 52 percent last year, with millennials and Gen Xers, ages 36-51, leading the way at 85 percent and 64 percent, respectively.
Ajid for those who already own ETFs, 88 percent plan to continue or increase their use of ETFs.
As more investors become familiar with ETFs, they’re finding new ways to access markets, trade exposures, and build more efficient portfolios with ETFs.
“People have evolved from (asking), What are ETFs?’ to ‘How do I use them to meet my investment goals?’ That’s a tremendous shift from a few years ago and a reflection of greater awareness- and the innovative ETFs coming to m? Net,” says Small. ‘Today, iShares is file to index exposures with greater quality and precision that we could only dream of just a decade ago.”
Costs remain a top consideration for investors, and that’s driving more ETFs to the core of portfolios. Other prominent uses include diversification, and international and sector exposures.
ETF investors also are thinking long term. A third of investors plan to increase use of ETFs for long-term investing.
Even as more people become familiar with ETFs, there remain gaps in knowledge about the full breadth of applications. For example, while half of investors use individual stocks to generate income, only a third use ETFs for this purpose. As a result, stock pickers might be concentrating risk unintentionally in their portfolios-if a company cuts its dividend, for example or its stock price drops-compared to a more diversified dividend-paying ETF. Silvers are the standouts, not surprisingly: nearly two-thirds say they use ETFs to generate income.