**Retail Investors’ Appetite for ETFs Continues to Grow, Says Charles Schwab Asset Management Report**
Retail investors are increasingly enthusiastic about exchange-traded funds (ETFs), both experienced and potential users, according to the 14th annual “ETFs and Beyond” report from Charles Schwab Asset Management.
“It’s a continuation of the momentum we have been seeing. Investors continue to indicate they anticipate more of their investment portfolios going into ETFs in the future, such that they are actually thinking about a future where, in some cases, within five years, they may have an ETF-only portfolio,” said David Botset, head of strategy, innovation and stewardship at Schwab Asset Management.
### Survey Overview
The survey gathered responses from 2,000 retail investors, evenly split between those currently holding ETFs in their portfolios and those who do not. Among respondents with ETF holdings, 66% began investing in ETFs within the past five years, while 32% started investing before 2019. The findings were announced during the Schwab Impact conference held recently in Denver.
### Key Findings on ETF Usage
An overwhelming 93% of investors with ETF holdings consider ETFs a necessary part of their portfolio, and 82% identified ETFs as their preferred investment vehicle. Looking ahead, 61% reported plans to increase their ETF allocations in 2025, while 75% said they are likely to invest in another ETF within the next two years.
Currently, ETFs make up about 27% of these investors’ portfolios. They expect this allocation to grow to 34% within the next five years. Notably, 62% said they would shift money from individual stock investments into ETFs, and 51% would pull from mutual funds for this purpose. A smaller group (38%) intends to invest new money into ETFs.
### New vs. Experienced ETF Investors
Investors who began using ETFs in the past five years tend to plan larger increases in their ETF allocations compared to those with longer experience. Approximately half of both groups expect modest increases in the next year. However, 30% of newer investors plan significant increases, versus only 12% of experienced investors.
Regarding portfolio composition, 70% of newer ETF investors are open to allocating their entire portfolio to ETFs, compared with 49% of experienced investors. Similarly, 15% of new investors and 29% of experienced investors plan to maintain their current investment levels.
### Generational Differences
Millennial investors show the strongest enthusiasm for ETFs. Thirty-two percent plan significant increases in ETF holdings over the next year, compared to 20% of Gen X investors and only 6% of baby boomers. Additionally, 66% of millennials would consider an ETF-only portfolio, whereas just 42% of Gen X and 15% of baby boomers said the same.
### Interest Among Non-ETF Investors
Among investors without current ETF holdings, nearly half (48%) indicated they are likely to invest in an ETF within the next two years.
### Preferred Investment Strategies
The majority of surveyed investors (53%) build their ETF portfolios primarily around core strategies, supplemented by some tactical or niche holdings. Another 18% allocate their entire ETF portfolio to core strategies. U.S. equities remain the most popular asset class, with 52% planning to invest in it. Bonds/fixed income and cryptocurrency follow closely, each favored by 45% of respondents.
Other popular asset classes include emerging markets equities (41%), real assets (40%), international developed markets (29%), and alternatives (26%).
David Botset noted, “The majority of ETF investors are either using ETFs to establish a core investment portfolio, or they are doing a core investment portfolio with a small portion that is a little bit more tactical. An ETF, used in that way, can really serve the needs of a large variety of investors. In the same way that for many, many years, mutual funds have been serving that exact purpose. But ETF investors are seemingly using ETFs more and more in lieu of mutual funds.”
More than half of investors (54%) planned to invest in dividend ETFs. Single-stock ETFs came in second, with 36% interest.
### Passive vs. Active ETF Preferences
Investors showed a preference for passive ETFs when tracking U.S. equities, bonds/fixed income, international developed markets, and cryptocurrency. Conversely, active management was preferred for emerging market equities (39% active vs. 35% passive) and alternative investments (35% active vs. 32% passive).
The top reason for choosing actively managed ETFs was the potential to outperform index funds, cited by 63% of respondents. Other reasons included access to alternative strategies (51%), potential downside protection (45%), and access to specific funds or asset managers (41%).
### Factors Influencing ETF Choice
Total cost emerged as the most important factor for ETF selection, with 59% of respondents citing it—an increase of 200 basis points from the 2024 survey. The reputation of the ETF provider also influenced decisions for 55%.
Other factors, such as the ETF’s brand name (40%) and approach to investment stewardship (39%), were less critical in investors’ choices.
Both current ETF investors and those without ETF holdings expressed strong interest in optimizing tax strategies using ETFs (60% and 49%, respectively). Furthermore, investing in long-term trends and macro themes was important to 55% of current ETF investors and 39% of non-ETF investors.
### About the Survey
The annual study was conducted between July 25 and August 14, 2025. Eligible participants were aged 25 to 75, held at least $25,000 in investable assets, and if they did not already invest in ETFs, were at least somewhat familiar with the products. Independent research company Logica Research conducted the survey on behalf of Charles Schwab Asset Management.
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This comprehensive report highlights the growing acceptance and enthusiasm for ETFs among retail investors and underscores the evolving preferences shaping ETF investment strategies.
https://www.wealthmanagement.com/etfs/schwab-majority-of-retail-investors-plan-to-up-their-etf-allocations