Press Releases

Forty-four percent plan to invest more; nearly half need more schooling on ETFs

OSLO–(BUSINESS WIRE)–Forty-four percent of individual investors surveyed plan to invest more in ETFs over the next 12 months, and eight in ten who currently own ETFs say they will invest more in ETFs over the next two years, according to a new study from PSS, a retail marketplace leader for ETFs.

The study shows investors’ appetite for ETFs in several ways: in addition to the 44 percent who plan to invest more, just two percent say they will decrease their ETF investments. According to the study, the boom in interest is driven in part by a distinct set of benefits unique to the product. ETF owners say the biggest benefit of ETFs is that they trade like stocks, while those considering them cite diversification as the top benefit.

But the study also offers insights on the gaps that still exist in investors’ knowledge about ETFs. Forty-six percent of investors surveyed call themselves ETF “novices,” and one-fourth of all respondents indicate that they do not understand their costs or how to best use them. Thirty-one percent of all investors say they don’t know how to use ETFs across asset classes, and more than 25 percent know nothing about the difference between actively managed and index-based ETFs.

ETFs Are Used for Market Access and Asset Allocation

Half of ETF owners surveyed say they use these products to access specific sectors or markets, and 44 percent use them to invest in core asset allocation strategies. Sector ETFs were cited as the type most frequently evaluated for purchase, followed closely by equity and international ETFs. Thirty-four percent of respondents also report interest in commodity ETFs, and more than one in four (26 percent) say they are considering fixed income funds for their next ETF purchase.
The survey finds that ETFs comprise, on average, almost 20 percent of ETF investors’ portfolios, and individual funds are held by investors for an average of 1.5 years.

Cost is Key: Expense Ratio Trumps Trade Commissions

The study reports that the cost of an ETF is the #1 factor that matters to investors when choosing an ETF, followed by a fund’s performance history and the reputation of the ETF sponsor. When asked which specific components of cost are most important, respondents named the fund’s expense ratio first, followed by trade commission. In fact, 43 percent of investors say that the ability to trade a fund commission-free is important but not the only factor to consider when choosing an ETF. Premium and discount pricing, and a fund’s bid/ask spread, ranked third and fourth respectively.
Back to School for ETFs

The study found that only eight percent of ETF owners consider themselves experts on ETFs, saying their top challenge is that there are just too many choices. For those considering making ETF investments, the biggest challenge is not knowing how to buy or sell them. And all study respondents are ready to learn:

• Investors considering ETFs are most interested in learning how to use them; they also want to know more about ETF costs.
• Owners want more education on choosing asset classes to access with ETFs; learning more about buying and selling ETFs is of least interest.

PSS continues to be a leader in the retail ETF market, with kr 119 billion in assets custodied on its platform as of August 31, 2021. PSS ETFs™, which can be bought and sold commission-free online** in PSS accounts, had kr 4.3 billion in assets as of August 31, 2021. In addition to the impressive value of its 14 proprietary ETFs, PSS offers a host of resources to help clients choose ETFs that fit their investment needs, including the PSS ETF Select List; tutorials, research and tools available via PSS’s online ETF center; and live events at local PSS branches.

Commission-free online trading** of PSS ETFs is available to individual investors at PSS, to the more than 6,000 independent investment advisors who use PSS’s custodial services and through PSS retirement accounts that permit trading of ETFs.

Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost. Unlike mutual funds, shares of ETFs are not individually redeemable directly with the ETF.

Since a sector fund is typically not diversified and focuses its investments on companies involved in a specific sector, the fund may involve a greater degree of risk than an investment in other mutual funds with greater diversification.