The ETF industry is constantly evolving, and research shows that investors are increasingly interested in the funds even though they may not necessarily be invested…yet.
Although ETFs have been trading on the exchanges for about 20 years, the majority of investors have barely scratched the surface with these funds. There is interest in them, however, the number of investors actually using them is small in comparison. According to a new survey released by TD Ameritrade Holding Corporation (AMTD), only 34 % of investors surveyed have heard of ETFs, and fewer, about 25% have a basic understanding of the product, and only 15% own ETFs in their portfolios.
But the study also revealed that ETFs may be what investors are looking for. The ability to reduce risk through diversification was the number-one requested feature among the 40% who said they were undecided about ETFs.
The MarketWatch press release indicates there is a huge market share still up for grabs in this investment business, but there is still a need for education. While some investors may just be starting to dip their toes in the ETF pool, the results of educating self-directed investors about ETFs are clear. According to a similar survey among TD Ameritrade clients, 76% have heard of or owned ETFs and 49%have a better understanding of ETFs today compared to one year ago.
The study revealed increased use of ETFs in retirement accounts; 60% of respondents said they use these tools in a TD Ameritrade retirement account.Tisha Guerrero contributed to this article.