Retail investors between 18 and 34 years old are more than twice as likely to invest in Exchange Traded Funds (ETFs) compared to those over 55, according to research by Invesco.
The research, which involved 1009 private investors, highlights the preferences and understanding of different age groups in relation to ETF investments, said Invesco.
The findings reveal that 92% of investors aged 18-34 have allocated funds to ETFs in their portfolios, while only 43% of investors over 55 have done the same. Additionally, 84% of 18-34 year-olds invest more than a quarter of their portfolios in ETFs, compared to 30% of investors over 55.
The study also reveals a generational difference in the reasons for investing in ETFs. For investors over 55, 51% of respondents cited diversification as the primary motivation. However, among the 18-34 demographic, diversification ranks third, with only 29% considering it a key factor.
The research also indicates a lack of understanding about ETFs among private investors, with 60% unable to accurately identify what “ETF” stands for and 62% unable to define what ETFs do. Among investors who do not currently invest in ETFs, 48% cite a lack of knowledge as the main reason.
In response to these findings, Invesco has launched the Invesco FTSE All-World UCITS ETF. Tracking the FTSE All-World Index, the ETF offers exposure to over 4,000 large and mid-sized companies across 49 developed and emerging market countries, with an annual charge of 0.15%.
Gary Buxton, head of Emea ETFs at Invesco, said: “Retail investors are looking for simple, low-cost investment options with the potential for outperformance, but too many are unaware of how ETFs can help meet these objectives.
“While we expect newer investors to need education about the benefits of investing in ETFs, the number of experienced investors that have are not realising these benefits. It is incumbent on us, as ETF providers, to better explain the role our products can play in portfolios,” he added.
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