Key Takeaways
- Most exchange-traded fund investors say that economic and political events such as high inflation and the election have had no effect on how they invest in ETFs, according to a new report by Charles Schwab Asset Management.
- ETF investors are more enthusiastic about tech and growth stocks than they were last year.
- Younger generations of investors are more likely than older generations to express interest in investments like crypto and alternative ETFs.
- Millennials also want to increase their allocation to fixed-income ETFs.
Market volatility, high interest rates, inflation and the upcoming presidential election haven’t affected the investment strategies of most exchange-traded fund (ETF) investors.
Most ETF investors surveyed by Charles Schwab (SCHW) Asset Management said that these economic and political events did not change the way they invest in ETFs. In fact, roughly a third of the investors put more money into ETFs based on their reading of stock market volatility, high interest rates and persistent inflation, according to the survey results released this week.
ETFs have a track record across market cycles, said David Botset, Managing Director, Head of Innovation and Stewardship at Schwab Asset Management, adding that “investors are confident in their investments even when the outlook is uncertain.”
What Are ETF Investors Betting On?
ETF investors have grown more bullish on certain types of stocks and sectors since last year: 69% are bullish on technology and 60% on growth stocks.
Additionally, 55% of investors are optimistic about the the Magnificent 7, a group of seven mega-cap technology companies including Nvidia (NVDA), Meta (META), Amazon (AMZN), Microsoft (MSFT), Alphabet (GOOG) (GOOGL), Apple (AAPL) and Tesla (TSLA).
The Mag 7 stocks have a big influence on the stock markets and have driven much of the S&P 500’s returns over the past year. But when they falter, as they did in July this year, they tend to drag the broader stock market down with them.
Millennials Want Crypto Risk But Are Also Risk-Averse
The survey also showed how investment preferences vary across generations.
For instance, 62% of millennials (or those born between 1981 and 1996), said they plan to invest in cryptocurrency ETFs over the next year versus 15% of Boomers (or those born between 1946 and 1964). A quarter of millennials said they plan to invest in alternatives ETFs, compared with just 11% of boomers.
At the same time, 44% of millennials also want to increase their exposure to lower-risk fixed income ETFs. In contrast, fewer GenX (34%) and Boomer (26%) investors plan to do likewise.
This is in line with other recent studies that point to recent stock market volatility making millennials more risk-averse compared to some older generations.