NEW YORK--(BUSINESS WIRE)--Exchange traded funds (ETFs) will play a bigger role in investment portfolios in 2017, according to data released today by BlackRock, Inc. (NYSE:BLK). The “BlackRock ETF Pulse Survey,” which polled advised and self-directed individual investors, shows that 52% of U.S. investors intend to buy an ETF in the next 12 months. This trend is reinforced by 94% of U.S. financial advisors, also surveyed, who expect to invest in ETFs in client portfolios in the coming year. 46% of those new purchases would be funded by cash savings.
The survey also reveals that one in four investors already use ETFs, and that these investors tend to be younger, more engaged in managing their finances, and optimistic about their financial futures than the overall investment population. More than 8 in 10 (82%) of financial advisors currently use ETFs in the portfolios they manage.
“With one-quarter of Americans today already owning an ETF, these are clearly not niche products,” says Martin Small, Head of U.S. iShares at BlackRock. “We fielded BlackRock’s first ETF Pulse Survey to learn not just ‘how many,’ but also to understand who is driving the growth, and how these individuals and advisors use and feel about ETFs in the context of their broader investment mix.”
“What’s encouraging is that people who like ETFs really like them,” Small adds. “These are confident investors who plan to continue to put their cash to work in the markets with ETFs, and expect to keep it there for the long term. Why? Because they have discovered the beneficial role that low cost indexing, versatility and choice can play in building an investment portfolio that focuses on value and quality. Coming off a record year where more people than ever turned to ETFs, the real opportunity now is to build on this momentum and help them understand how ETFs can enable them to become better investors over time.”
Other key findings include:
- ETF investors are generally more active in the markets and hold less cash (17% cash) in their investment portfolios compared to non-ETF investors (29% cash).
- Of those currently invested in ETFs, nine in 10 (90%) intend to allocate new investments to ETFs in 2017, and four in five (79%) feel positive about their financial future for 2017.
- More Millennials (age 21 to 35) are currently invested in ETFs than investors on average (33% vs. 25%), and more likely to be planning to invest in ETFs in the next 12 months (70% vs. 52%).
- About half of investors (47%) do not have a particular bias toward active or passive investing. Among those who own ETFs, the majority (87%) say that owning ETFs and mutual funds together in a portfolio can be beneficial.
Investors and Financial Advisors Value the Cost Benefits of ETFs But Have Differing Views on Their Uses
When asked whether they think ETFs are short- or long-term investments, six out of 10 investors (64%) currently view ETFs as long-term or both long and short-term holdings, as do 81% of advisors. The average holding period for ETFs is five years for both groups.
Investors and financial advisors also recognize the power and versatility of ETFs as a portfolio tool. Some of the common uses: increasing diversification, core exposure to large market indexes, and access to specific sectors. ETFs are being used to replace individual stocks and to replace mutual funds.
| Use of ETFs in Current Investment Portfolio | % of ETF Investors | % of Financial Advisors | ||||||
| To increase the overall diversification in my portfolio | 53% | 69% | ||||||
| For exposure to large market indices (e.g., S&P 500) | 43% | 79% | ||||||
|
For exposure to a specific sector (e.g., healthcare, |
36% | 78% | ||||||
| As a replacement for individual stocks | 42% | 72% | ||||||
| As a replacement for mutual funds | 44% | 84% |
Both individuals and financial advisors rank cost benefits of ETFs highly, but differ on other top features.
|
Top 3 features/benefits of ETFs: investors |
Top 3 features/benefits of ETFs: financial advisors |
|||||||||||
| Low management fees | 30% of investors | Low management fees | 58% of financial advisors | |||||||||
| Low cost to buy and sell | 29% of investors |
Ability of ETFs to give |
41% of financial advisors | |||||||||
|
Ability to diversify and |
23% of investors |
Tax advantages relative |
36% of financial advisors | |||||||||
Millennials and Gen X Favor ETFs and Curious to Learn More in 2017
One quarter of investors took steps to learn about ETFs in 2016, while eight in 10 financial advisors took steps to learn more about ETFs. This momentum is expected to increase in 2017 with 49% of investors planning to learn more about ETFs in 2017.
More Millennials are currently invested in ETFs than investors on average (33% vs. 25%). Millennials investors (45%) and Gen X investors (38%) also took the biggest “learning steps” with ETFs last year, and plan to continue learning more in 2017.
Key ETF topics of interest to investors in 2017 include: ETF risks (43%) and benefits (40%); how to evaluate (38%) and select (32%) ETFs that work for their goals; tax advantages (37%); ETF management fees (28%) and performance (28%).
|
Total |
Millennials
(ages 21-35) |
Gen X
(ages 36-51) |
Boomers
(ages 52-70) |
Silvers
(ages 71-75) |
||||||||||||
| Currently invested in ETFs | 25% | 33% | 26% | 24% | 22% | |||||||||||
| Plan to invest in ETFs in the next 12 months | 52% | 70% | 61% | 50% | 35% | |||||||||||
| Took steps to learn about ETFs in 2016 | 28% | 45% | 38% | 24% | 16% | |||||||||||
| Plan to learn about ETFs in 2017 | 49% | 59% | 57% | 48% | 33% |
Financial advisors are the top source of ETF information for older investors, while younger investors rely more heavily on financial media sources.
|
Source of ETF |
Total |
Millennials
(ages 21-35) |
Gen X
(ages 36-51) |
Boomers
(ages 52-70) |
Silvers
(ages 71-75) |
||||||||||
| Financial Advisor | 26% | 14% | 24% | 28% | 31% | ||||||||||
|
Market Commentary/
Financial Media |
39% | 46% | 45% | 38% | 25% | ||||||||||
| Web Research | 22% | 22% | 26% | 23% | 14% |
“Investors are clearly hungry to learn more about ETFs, and financial advisors will continue to play an increasingly important role in helping investors better understand how they can use ETFs to achieve growth and their financial goals. ETFs are no longer just about the S&P 500. There is a breadth of ETF offerings including bond, single country and smart beta that can play key roles in a portfolio, and people are keen to know more from their financial advisors,” says Hollie Fagan, Head of BlackRock’s dedicated Registered Investment Advisor Channel, Retail Investor Platforms and Retail Financial Institutions Group.
About BlackRock
BlackRock is a global leader in investment management, risk management and advisory services for institutional and retail clients. At December 31, 2016, BlackRock’s AUM was $5.1 trillion. BlackRock helps clients around the world meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, iShares® (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. As of December 31, 2016, the firm had approximately 13,000 employees in more than 30 countries and a major presence in global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa. For additional information, please visit the Company’s website at www.blackrock.com | Twitter: @blackrock_news | Blog: www.blackrockblog.com | LinkedIn: www.linkedin.com/company/blackrock
About the BlackRock ETF Pulse Survey
The BlackRock ETF Pulse Survey examines the attitudes and investment behaviors of investors and financial advisors in the United States. Over 1,410 respondents in the U.S. were surveyed online in September 2016, including 1,001 investors and 409 financial advisors. The online surveys, which were conducted by Kantar TNS, one of the world’s largest research agencies, have margins of error of +/- 2.4 percentage points for the investor sample and +/- 4.5 percentage points for the advisor sample at the 90% confident level. The BlackRock ETF Pulse Survey is the third in a series of insight-driven studies fielded by BlackRock including BlackRock’s Global Investor Pulse Survey and the DC Pulse Survey. For more information on the BlackRock ETF Pulse Survey click here.
Carefully consider the iShares Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses which may be obtained by visiting www.iShares.com or www.blackrock.com. Read the prospectus carefully before investing.
Investing involves risk, including possible loss of principal.
Transactions in shares of ETFs will result in brokerage commissions and will generate tax consequences. All regulated investment companies are obliged to distribute portfolio gains to shareholders. There can be no assurance that an active trading market for shares of an ETF will develop or be maintained. Diversification and asset allocation may not protect against market risk or loss of principal.
This material represents an assessment of the market environment as of the date indicated; is subject to change; and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any issuer or security in particular.
The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
©2017 BlackRock. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock. All other marks are the property of their respective owners. iS-20003-0117
