Retail investors’ appetite for ETFs continues to grow among both experienced and potential users, according to the results of 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.
The survey included responses from 2,000 retail investors, evenly split between those who already hold ETFs in their portfolios and those who don’t currently invest in them. Most respondents with ETF holdings began investing in these vehicles within the past five years (66%), with 32% investing before 2019.
The survey results were announced at the Schwab Impact conference held this week in Denver.
An overwhelming majority (93%) of investors with ETF holdings stated that ETFs were a necessary part of their portfolio, and 82% identified ETFs as their preferred investment vehicle. Over half (61%) reported increasing their ETF allocations in 2025, and three-quarters indicated that they were likely to invest in another ETF within the next two years.
Today, about a quarter (27%) of these investors’ portfolios are allocated to ETFs. Within the next five years, they expect that figure will rise to 34%. Moreover, a majority (62%) said they would pull money from individual stock investments to put into ETFs, and 51% said they would pull money from mutual funds to do so. A more modest share (38%) said they would invest in ETFs with new money that hasn’t been invested yet.
Investors who have come to ETFs in the past five years are more likely to plan a significant increase in their allocations than those who began investing in ETFs in 2019 or earlier. Roughly half of both these groups of investors said they planned to increase ETF investments modestly in the next year. However, 30% of newer investors plan to significantly increase their ETF investments during the period, compared to just 12% of investors with extensive experience in the sector. Another 15% of new investors and 29% of experienced investors planned to keep their investments at about the same level as today. Newer investors were also considerably more likely to say they would consider allocating their entire portfolio to ETFs (70%), compared to 49% of more experienced investors.
In addition, millennial investors were more likely to significantly increase their ETF holdings in the next year, at 32% of their peer group, compared to Gen X investors (20%) and baby boomers (6%). A majority of millennial respondents (66%) also said they would consider allocating their entire portfolio to ETFs. Only 42% of Gen X investors and 15% of baby boomers said they would consider doing so.
When it came to investors who have no current ETF holdings, 48% said they were likely to invest in an ETF within the next two years.
Preferred Strategies
For the majority of investors included in the survey—53%—their ETF portfolio relies primarily on core strategies, with some tactical/niche holdings. Another 18% said their entire ETF portfolio is allocated to core.
U.S. equities remain the most popular asset class for ETF investment, with 52% of survey respondents planning to invest in it. Bonds/fixed income and cryptocurrency were the next two most popular options, named by 45% of respondents each. Emerging markets equities (41%) and real assets (40%) were lower on the list, followed by international developed markets (29%) and alternatives (26%).
“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,” said Botset. “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.”
Over half (54%) of surveyed investors planned to invest in dividend ETFs. Other strategies were considerably less in demand, with single-stock ETFs taking second place, with 36% of respondents.
Investors were more likely to choose passive funds over active ones for ETFs tracking U.S. equities, bonds/fixed income, international developed markets and cryptocurrency. They preferred actively managed ETFs when it came to emerging market equities, with 39% choosing an active strategy versus 35% who preferred a passive approach. The next most popular strategy for active management was alternative investments, with 35% opting for it, compared to 32% who would choose a passive ETF.
The potential to outperform index ETFs was the top reason investors cited for choosing an actively managed fund, with 63% mentioning it. Additional reasons included access to alternative strategies (51%), potential downside protection (45%) and access to specific funds/asset managers (41%).
How Investors Make Their Choices
Total cost was the No. 1 factor for why respondents chose a particular ETF, with 59% citing it. The figure showed a 200-basis-point uptick from 2024 survey results. The reputation of the ETF provider also carries considerable weight, with 55% of respondents basing their investment decision on it. Factors such as the brand name of the ETF (40%) and approach to investment stewardship (39%) appeared to be far less integral to investors’ decisions.
Both investors with ETF holdings and those with no current ETF allocations said they were extremely interested in optimizing their tax strategies with ETFs, at 60% and 49%, respectively. Investing in long-term trends and macro themes was another area of high interest for 55% of current ETF investors and 39% of those without ETF holdings.
The annual study was conducted between July 25 and Aug. 14, 2025. To participate, survey respondents had to be between 25 and 75 years of age, hold at least $25,000 in investable assets and be at least somewhat familiar with ETFs if they did not invest in ETF products. Independent research company Logica Research conducted the survey.