Most ETF Investors Can Envision Moving to ETF-Only Portfolios With Half Saying It Could Be in the Next Five Years

The momentum continues: With more ways to invest than ever before, investors are expanding their investing horizons and choosing ETFs to help get them where they want to go

WESTLAKE, Texas--(BUSINESS WIRE)-- Amid an expanding universe of new investing products, asset classes and strategies, ETFs are playing a dual role in investor portfolios – serving as low-cost building blocks and a flexible entry point for exposure to more specialized areas. According to Schwab Asset Management’s 2025 “ETFs and Beyond” study, most ETF investors (62%) can envision putting their entire investment portfolios into ETFs – with half (50%) saying they could be fully invested in ETFs in the next five years, signaling growing affinity for and reliance on the products to meet a wide range of investing needs. At the same time, many investors are just discovering ETFs. Most ETF investors (66%) responding to Schwab Asset Management’s latest study started investing in ETFs within the past five years.

The study findings underscore that low costs and accessibility are key drivers of the ongoing momentum behind investor uptake of ETFs. ETF investors overwhelmingly agree (94%) that ETFs help them keep costs down within their portfolios. Just over half (53%) describe their portfolio allocations as mostly core with some tactical/niche ETFs. About half strongly agree that ETFs allow them to try investing in more niche or targeted strategies separate from their long-term portfolio (49%) – or to invest in asset classes they normally wouldn’t have access to (46%).

“The world of investing is undergoing a rapid transformation as individual investors gain access to new asset classes, investing strategies and vehicles. ETF investors are at the forefront of this evolving landscape. They are using ETFs, which now outnumber individual stocks in the U.S.¹, not only for low-cost core portfolio investments but also to explore the expanding universe of investment opportunities,” said David Botset, Managing Director, Head of Strategy, Innovation and Stewardship, Schwab Asset Management.

Core and explore portfolios

ETF investors plan to add both index ETFs (66%) and active ETFs (65%) to their portfolios over the next year – and many are also interested in exploring specialty product types and niche asset classes. Interest in fixed income – as demonstrated by strong flows into fixed income ETFs² in recent years – remains a focal point with 40% of ETF investors planning to increase their fixed income allocations. Compared to 2024, more ETF investors want to be in fixed income because they anticipate being in a high-interest rate environment for the foreseeable future (48%, up from 37%). Overall, ETF investors expect to fund new ETF investments by selling mutual funds, individual stocks and bonds, and by investing new money (e.g., new cash or contributions not invested yet).

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1		US ETFs Eclipse Total Number of Stocks in Paradox of Choice for Investors - Bloomberg
2		ETFs are on pace to take in a record $1.3 trillion in 2025. Here's where the money's going. | Morningstar

Sources of money for new ETF investments				Asset classes planning to invest in over the next year via ETFs				Top specialty ETFs planning to invest in over the next year
Individual stocks	62	%		U.S. equities	52	%		Dividend ETFs	54	%
Mutual funds	52	%		Bonds/fixed income	45	%		Single stock ETFs	36	%
Individual bonds	40	%		Cryptocurrencies	45	%		Long/Short ETFs	35	%
New money (e.g. new cash or contributions not invested yet	38	%		Emerging market equities	41	%		Spot cryptocurrency ETFs	34	%
								Thematic ETFs	31	%
Direct indexing or separately managed accounts (SMAs)	21	%		Real assets	40	%		Buffer ETFs	27	%
Other investment vehicles	1	%		International developed markets equities	29	%		Leveraged ETFs	26	%
				Alternatives	26	%		Volatility ETFs	25	%

Expanding ETF appetite

Enthusiasm for ETFs remains high, and ETF investors are eager to grow their holdings. Most (61%) increased their allocations to ETFs in 2025, and three-quarters (75%) are extremely likely to purchase an ETF in the next two years. ETF investors are also confident in their use of ETFs, with many planning to put more money into ETFs in response to anticipated market and economic trends.

How do you expect each event to impact your ETF investing in the coming months?	I will put more money into ETFs		I will take money out of ETFs		Will not impact how I invest in ETFs
Growth potential for AI	51	%	13	%	36	%
Market volatility	42	%	20	%	38	%
High interest rates	40	%	18	%	42	%
Inflation	40	%	21	%	39	%
U.S. trade policy	39	%	18	%	43	%
Recession fears	38	%	21	%	41	%
Geopolitical conflicts	31	%	21	%	48	%

New ETF investors

New ETF investors (those who started investing in ETFs within the past five years) tend to be eager to invest more in the products. And they also tend to be younger – 49% of newer ETF investors are Millennials compared to 34% of tenured ETF investors. Despite being relatively new to the category, they’ve already dedicated a similar share of portfolio to the products as their more tenured counterparts. Meanwhile, there continues to be strong interest among non-ETF investors in moving into ETFs. About half (48%) of non-ETF investors are likely to consider purchasing ETFs in the next two years.

Plan to significantly increase ETF investments in next year				Percent of investments in ETFs today				Likely to consider putting entire portfolio in ETFs
Newer ETF investors	30	%		Newer ETF investors	26	%		Newer ETF investors	70	%
Tenured ETF investors	13	%		Tenured ETF investors	28	%		Tenured ETF investors	49	%

“ETFs are no longer the new kid on the block, but they still have a long runway when it comes to investor awareness and adoption,” said Botset. “More and more investors are learning about the potential benefits of ETFs – including low fees, tax efficiency and tradability – and we believe that is fueling record growth for the category year-after-year and continued product innovation.”

How investors choose ETFs

Total cost remains the top factor ETF investors consider when selecting ETFs (59%), though it is followed closely by other factors, including reputation of the provider (55%), historical returns (53%), portfolio manager track record (53%), and how well an ETF tracks to its index (52%). Whether ETF investors prefer indexed or actively managed ETFs depends on the asset class.

Preference toward active vs. index ETFs by asset class	Index		Active
U.S. equities	42	%	33	%
Bonds/fixed income	40	%	32	%
International developed markets equities	38	%	30	%
Real assets	36	%	36	%
Emerging market equities	35	%	39	%
Cryptocurrencies	34	%	30	%
Alternative investments	32	%	35	%

When thinking about whether to purchase an active ETF over an index ETF, ETF investors say they would consider purchasing an actively managed ETF when it has the potential to outperform a traditional index ETF (63%) or to access alternative strategies or asset classes not typically available to them through index ETFs (51%).

“ETF investors have grown more sophisticated in how they evaluate the products they choose, and they are considering many factors, but cost remains king,” Botset commented. “Investors understand that keeping costs low has significant impacts on returns and long-term outcomes. Even as investors become interested in specialized strategies and novel asset classes, they are focused on keeping costs down across their portfolios.”

Millennial ETF investors: Confident, curious, tactical

Millennials continue to show outsized interest in ETFs and be early adopters of new product categories and strategies. In the next year, Millennials expect to increase ETF investments more than other generations and they are the most likely to consider putting their entire portfolio in ETFs. Millennials are more interested in investing in a broad range of specialty ETFs in the next year, including spot cryptocurrency ETFs (44%) and single stock ETFs (43%).

Millennial ETF investors are also enthusiastic when it comes to the markets and how they approach investing. They are most likely to say they have the skills to outperform the market (Millennials: 69%, Gen X: 53%, Boomers: 36%) and to take a tactical approach to investing (Millennials: 54%, Gen X: 44%, Boomers: 29%). Boomers are more likely to be buy-and-hold investors (Millennials: 46%, Gen X: 56%, Boomers: 71%).

Plan to significantly increase ETF investments in the next year				Open to putting entire portfolio in ETFs in next five years				Plan to invest in spot crypto ETFs				Plan to invest in single stock ETFs
Millennials	32	%		Millennials	66	%		Millennials	44	%		Millennials	43	%
Gen X	20	%		Gen X	42	%		Gen X	33	%		Gen X	33	%
Boomers	6	%		Boomers	15	%		Boomers	11	%		Boomers	17	%

“Millennials have embraced ETFs as their go-to investment product to build wealth,” said Botset. “As more and more complex and niche ETFs come to market, it will be important for Millennials, who are more likely to take a tactical approach to investing, to think about their long-term goals and choose products that will help them stay invested through market cycles.”

Seeking a personal touch

ETF investors have a strong desire to control, customize and personalize their portfolios, especially compared to non-ETF investors. This includes a strong desire to optimize portfolios for tax liabilities. Perhaps as a result, interest in direct indexing is on the rise with nearly half (45%) of ETF investors extremely interested in learning more, up from 38% in 2024. Nearly one-third (30%) are very likely to invest in direct indexing in the next 12 months.

Attitudes toward personalization	ETF investors		Non-ETF investors
More control over investments is extremely important	66	%	61	%
Greater ability to customize investments is extremely important	62	%	54	%
Extremely important that investments are optimized for tax liabilities	61	%	59	%
Extremely interested in managing unique risks in my portfolio	51	%	36	%

To read the full “2025 ETFs and Beyond” report, click Charles Schwab 2025 ETFs and Beyond Study.

About Schwab Asset Management

One of the industry’s largest and most experienced asset managers, Schwab Asset Management offers a focused lineup of competitively priced ETFs, mutual funds and separately managed account strategies designed to serve the central needs of most investors. By operating through clients’ eyes, and putting them at the center of our decisions, we aim to deliver exceptional experiences to investors and the financial professionals who serve them. As of September 30, 2025, Schwab Asset Management managed approximately $1.5 trillion on a discretionary basis and $38.0 billion on a non-discretionary basis. More information is available at www.schwabassetmanagement.com.

About the Study

Schwab Asset Management commissioned Logica Research to conduct an online survey of a total of 2,000 individual investors between the ages of 25 and 75 with at least $25,000 in investable assets. 1,000 of whom have bought or sold ETFs in the past two years (ETF investors) and 1,000 of whom have never bought or sold ETFs or have not bought or sold ETFs within the past two years (non-ETF investors). The study was conducted from July 25 to August 14, 2025. Survey respondents were not asked to indicate whether they had accounts with Schwab. All data is self-reported by study participants and is not verified or validated. Logica Research is neither affiliated with, nor employed by, Charles Schwab & Co., Inc.

About Charles Schwab

At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

More information is available at www.aboutschwab.com. Follow us on X, Facebook, YouTube and LinkedIn.

Disclosures:

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. Shares of ETFs are bought and sold at market price, which may be higher or lower than the net asset value (NAV).

Investing involves risk including loss of principal. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

Schwab Asset Management^® is the dba name for Charles Schwab Investment Management, Inc. Schwab Asset Management and Charles Schwab & Co., Inc. are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.

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Christine Underhill

Charles Schwab

415-961-3790

Source: The Charles Schwab Corporation