A recent study by Schwab Asset Management reveals that ETF investors are holding onto their optimism, even amidst market and political uncertainty. The 2024 edition of “ETFs and Beyond,” an annual study by Schwab, found that a whopping 75% of respondents are confident their portfolios can weather a deep recession or a black swan event.
This bullish sentiment is reflected in their investment strategies. ETFs currently make up 27% of ETF investors’ portfolios, and a significant 65% plan to increase their ETF investments in the coming year. This is notable considering the current climate of market volatility, recession fears, and political uncertainties. Despite these challenges, 91% of ETF investors believe ETFs are an essential part of their portfolios.
The study also reveals a significant shift in investor preferences. Cryptocurrencies are experiencing a surge in popularity among ETF investors, jumping from 38% in 2023 to 45% in 2024. This trend is particularly evident among millennials, who are showing the most interest in various ETF types and asset classes, including fixed income, alternatives, crypto, and smart beta.
While U.S. equities and alternatives remain relatively stable, bonds/fixed income have seen a slight decline, falling from 47% to 44%. This suggests a potential shift in investor sentiment towards higher-risk, potentially higher-return investments like cryptocurrencies.
The Schwab survey reinforces the traditional 60/40 portfolio strategy, with an average of 60% allocated to equities and 40% to fixed income. However, generational differences are evident. Millennials are allocating 54% to equities and 46% to fixed income, demonstrating a greater appetite for risk.
David Botset, managing director, head of Innovation and Stewardship at Schwab Asset Management, sums up the sentiment, describing ETF investors as “even-keeled, tempered, and fearless.”
The study’s findings are drawing attention from across the financial landscape. TylerD, a crypto trader, remarked, “Mainstream is more bullish on crypto than we realized.”
The growing influence of Bitcoin as an institutional asset class will be further explored at Benzinga’s upcoming Future of Digital Assets event on November 19. This event promises to provide valuable insights into the evolving landscape of digital assets and their potential impact on traditional financial markets.
