- Survey finds ETF strategies are used by majority of
financial advisors and institutions; adoption by individual
investors on the rise
- Education key to increasing use of ETFs by
individuals
- Most institutional investors and financial advisors are
bullish on the S&P 500’s 2024 returns
State Street Global Advisors, the asset management business of
State Street Corporation (NYSE: STT) today released the results of
its 2024 ETF Impact Survey, which reveals more than two thirds of
financial advisors (70%) “always” or “often” recommend ETFs to
their clients and a similar percentage of institutional investors
(67%) use ETFs in investment strategies. While less than half of
all individual investors (45%) currently have ETFs in their
portfolio —adoption by individuals is up from 40% in 2022 and
appears poised for additional growth with more education. The
survey was first conducted in 2022 and is designed to understand a
wide range of investor attitudes and perceptions about ETFs, the
market and the economy.
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While less than half (45%) of individual
investors have ETFs in their investment portfolios, nearly 70% of
financial advisors recommend ETFs to their clients “always” or
“often” and 67% of institutional investors use ETFs in their
investment strategies “extensively” or “frequently.” (Source: State
Street Global Advisors 2024 ETF Impact Survey, April 2024)
The use of ETFs by individual investors is highest among younger
individuals, as 58% of Millennial investors report they hold ETFs,
compared to 47% of Gen Xers and 37% of Baby Boomers. The top
reasons individual investors cite for holding ETFs in a portfolio
include diversification benefits (49%), access to specific asset
classes/exposures (47%) and lower costs/expense ratios (39%).
Notably, 65% of investors say that ETFs have improved the
overall performance of their portfolio (up from 59% in 2022), and
the percentage of investors who believe ETFs have made them a
better investor has held steady at 54%, compared to 53% in
2022.
"There is still growing confidence that ETFs should be a core
part of a diversified portfolio," said Anna Paglia, chief business
officer for State Street Global Advisors. "The rapid growth and
lower cost of ETFs since their introduction over 30 years ago has
made it easier for people from all walks of life to become
investors.”
Among individuals who do not own ETFs, a significant knowledge
gap exists with 71% reporting the tax efficiency of ETFs is
difficult to understand compared to 48% of ETF investors.
Similarly, more than two-thirds of investors (69%) who don’t own
ETFs say ETF pricing is difficult to understand (compared to 35% of
ETF investors) and more than half (57%) say they have a difficult
time understanding the difference between mutual funds and ETFs
(compared to 23% of ETF investors).
“Despite their popularity, significant investor education still
needs to be done to close the knowledge gap about ETFs,” said
Paglia. “We know many investors are initially drawn to ETFs for
their low cost, but more work needs to be done to raise awareness
of all the financial advantages ETFs offer investors, beyond
cost.”
Institutions & Financial Advisors More Bullish Than
Individual Investors
A majority of institutional investors (57%) and financial
advisors (55%) are bullish, expecting the S&P 500® to post
gains in 2024. Individual investors are less certain with 44%
predicting the index will finish up, 31% expecting S&P 500
returns to be flat, and 15% anticipating it will finish the year in
the red.
However, despite individual investors’ mixed outlook on the
near-term performance of the stock market, when it comes to the
long-term view of their own financial futures, they are decidedly
more optimistic. Eighty-four percent (84%) indicate they are
optimistic about their own financial futures in the year ahead — up
from 71% in Q4 2022.
There is a similar gap in confidence among individual investors
regarding their outlook for the country’s economic situation, with
just 32% indicating they are optimistic about the economy in the
year ahead.
Additional findings from State Street Global Advisors 2024 US
ETF Impact Survey for financial advisors and institutions
include:
Financial Advisors
- The top three reasons for recommending ETFs to clients include
cost efficiency (44%), diversification benefits (43%) and trading
flexibility (43%).
- When making a choice between ETFs that offer the same or
similar exposure, the most important factors considered by advisors
are best track record/performance (58%), lowest expense ratio
(54%), and highest liquidity (54%).
- More than three-quarters of advisors (77%) are optimistic about
the outlook for the US economy and 68% are optimistic about the
global economy.
Institutional Investors
- The top three reasons why institutions use ETFs include
diversification benefits (65%), cost efficiency (60%) and
cash/liquidity management (54%).
- When making a choice between ETFs that offer the same or
similar exposure, the most important factors considered by
institutions are highest liquidity (66%), best track
record/performance (62%), and lowest total cost (53%).
- A majority of institutional investors (60%) are optimistic
about the outlook for the US economy and 41% are optimistic about
the global economy.
- The top three concerns among institutional investors include
inflation (73%), fluctuations in interest rates (66%), and
geopolitical instability (65%).
“The nuances in how and why institutions, advisors, and
individuals are using ETFs speak to the many different investor
benefits provided by the ETF wrapper,” continued Paglia. “State
Street Global Advisors will continue to innovate and evolve its ETF
offerings to meet the changing demands of a wide variety of
investor segments.”
The SPDR ETF Impact Report 2024-2025: The Next Wave of
Innovation provides a comprehensive analysis of the global survey
findings and SPDR’s top predictions on the future of ETF
growth.
For more information, visit the ETF Impact Survey landing
zone.
About State Street Global Advisors 2024 ETF Impact
Survey
The survey was designed to understand investor attitudes and
perceptions about ETFs, the market and the economy in the US, APAC
and EMEA. The data reported here focuses on findings for the
US.
State Street Global Advisors, in partnership with A2Bplanning
and Prodege, conducted an online survey among individual investors,
financial advisors and institutional investors. In the US, data was
collected from April 1-25, 2024 from a nationally representative
sample of 1,000 adults 18+. It was then filtered for analysis among
319 Individual Investors with investable assets of $250,000 or
more, 201 financial advisors with AUM of $25 million or more with
90% with AUM of $50 million or more, and 100 institutional
investors who are involved in the decision making for AUM of $1
billion or more.
About State Street Global Advisors
For four decades, State Street Global Advisors has served the
world’s governments, institutions, and financial advisors. With a
rigorous, risk-aware approach built on research, analysis, and
market-tested experience, we build from a breadth of index and
active strategies to create cost-effective solutions. As pioneers
in index and ETF investing, we are always inventing new ways to
invest. As a result, we have become the world’s fourth-largest
asset manager* with US $4.42 trillion† under our care.
*Pensions & Investments Research Center, as of 12/31/23.
†This figure is presented as of June 30, 2024 and includes ETF AUM
of $1,393.92 billion USD of which approximately $69.35 billion USD
is in gold assets with respect to SPDR products for which State
Street Global Advisors Funds Distributors, LLC (SSGA FD) acts
solely as the marketing agent. SSGA FD and State Street Global
Advisors are affiliated. Please note all AUM is unaudited.
Important Risk Information
The information provided does not constitute investment advice
and it should not be relied on as such. It should not be considered
a solicitation to buy or an offer to sell a security. It does not
take into account any investor's particular investment objectives,
strategies, tax status or investment horizon. You should consult
your tax and financial advisor.
The whole or any part of this work may not be reproduced, copied
or transmitted or any of its contents disclosed to third parties
without SSGA’s express written consent.
Past performance is not a reliable indicator of future
performance.
Investing involves risk including the risk of loss of
principal.
The views expressed in this material are the views of the State
Street Global Advisors Practice Management Group through the period
ended May 30, 2024 are subject to change based on market and other
conditions. The opinions expressed may differ from those with
different investment philosophies. The information provided does
not constitute investment advice and it should not be relied on as
such. It does not take into account any investor's particular
investment objectives, strategies, tax status or investment
horizon.
All information is from SSGA unless otherwise noted and has been
obtained from sources believed to be reliable, but its accuracy is
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current accuracy, reliability or completeness of, nor liability
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Third party data providers make no warranties or representations
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ETFs trade like stocks, are subject to investment risk,
fluctuate in market value and may trade at prices above or below
the ETFs net asset value. Brokerage commissions and ETF expenses
will reduce returns. Frequent trading of ETFs could significantly
increase commissions and other costs such that they may offset any
savings from low fees or costs.
The S&P 500® Index is a product of S&P Dow Jones Indices
LLC or its affiliates (“S&P DJI”) and have been licensed for
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such parties make any representation regarding the advisability of
investing in such product(s) nor do they have any liability for any
errors, omissions, or interruptions of these indices.
In general, ETFs can be expected to move up or down in value
with the value of the applicable index. Although ETF shares may be
bought and sold on the exchange through any brokerage account, ETF
shares are not individually redeemable from the Fund. Investors may
acquire ETFs and tender them for redemption through the Fund in
Creation Unit Aggregations only. Please see the prospectus for more
details.
Distributor: State Street Global Advisors Funds
Distributors, LLC, member FINRA, SIPC, an indirect wholly owned
subsidiary of State Street Corporation. References to State Street
may include State Street Corporation and its affiliates. Certain
State Street affiliates provide services and receive fees from the
SPDR ETFs.
Before investing, consider the funds’ investment objectives,
risks, charges and expenses. To obtain a prospectus or summary
prospectus which contains this and other information, call
1-866-787-2257 or visit ssga.com. Read it carefully.
Not FDIC Insured - No Bank Guarantee - May Lose Value
State Street Global Advisors Fund Distributors, LLC,
member FINRA, SIPC
© 2024 State Street Corporation. All Rights Reserved. State
Street Global Advisors Funds Distributors, LLC, One Iron Street,
Boston, MA 02210
6790707.1.1.AM.RTL Exp. Date: 07/31/2025
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Deborah Heindel 617-662-9927 dheindel@statestreet.com
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