The number of exchange traded funds (ETF) investors, which has reached more than 1.7 million, has seen more younger and female investors in its ranks compared to five years ago, according to Investment Trends.
The firm’s 2021 ETF Investor and Adviser Report found that investors were increasingly using ETFs as portfolio core, meaning more than 25% of their portfolio in the product, and that investors were embracing thematic investing, with renewable energy being the most popular.
“ETF adoption reached new highs in 2021 among both investors and advisers. Whether judicious or otherwise, retail investors tacitly associate passive investing with a cautious approach. The (ongoing) market turbulence certainly appears to have propelled a product that already had strong wind in its sails,” Irene Guiamatsia, head of research at Investment Trends, said.
The report showed recent entrants to the market were on average younger and more likely to be female - 21% of new ETF investors were females aged between 18 and 34 years old.
According to the study, young people were drawn to the low-cost of investing of ETFs and ability to access these products with relative ease.
“Young women are on a mission to close the gender investing gap and determined to take charge of their financial future. They are eager to grow their knowledge and skills, highlighting education opportunities for issuers, financial advisers and investing platforms.
“2021 was a significant inflection point that saw the concepts of ‘doing good’ and ‘doing well’ finally coalesce in investors’ minds, with ETFs seen as the vehicle of choice providing ease of access,” Guiamatsia said.