Key Takeaways
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Most investors in exchange-traded funds say economic and political events such as high inflation and the election have had no effect on the way they invest in ETFs, according to a new report from Charles Schwab Asset Management.
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ETF investors are more enthusiastic about technology and growth stocks than last year.
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Younger generations of investors are more likely than older generations to show interest in investments such as crypto and alternative ETFs.
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Millennials are also looking to increase their allocation to fixed income ETFs.
Market volatility, high interest rates, inflation and the upcoming presidential election have not affected the investment strategies of most ETF (Exchange Traded Funds) investors.
Most ETF Investors Surveyed by Charles Schwab (SCHW) Asset Management said these economic and political events did not change the way they invest in ETFs. Roughly a third of investors are putting more money into ETFs based on their interpretation of stock market volatility, high interest rates and persistent inflation, according to survey results released this week.
ETFs have a track record across market cycles, says 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 become more bullish on certain types of stocks and sectors since last year, with 69% bullish on technology and 60% on growth stocks.
Additionally, 55% of investors are bullish on the Magnificent 7, a group of seven mega-cap tech companies including Nvidia (NVDA), Meta(META), Amazon (AMZN), Microsoft(MSFT), Alphabet (GOOG) (GOOGL), Apple (AAPL) and Tesla (TSLA).
Mag 7 stocks have a major 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 risks, but are also risk averse
The research also showed how investment preferences differ from generation to generation.
For example, 62% of millennials (or those born between 1981 and 1996) said they plan to invest in cryptocurrency ETFs in the next year, compared to 15% of boomers (or those born between 1946 and 1964). A quarter of millennials say they plan to invest in alternative ETFs, compared to 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 the same.
This is consistent with other recent studies suggesting that recent stock market volatility is making millennials more risk-averse than some older generations.
Read the original article on Investopedia.
