Crypto Over Bonds: ETF Investors Show Growing Interest in Crypto ETFs Over Bonds, Says Schwab Survey

• A survey shows that 45% of investors plan to invest in Bitcoin and crypto ETFs in the next year, up from 38% in 2023.
• Millennials show the most interest in crypto ETFs, with 62% planning to invest, while only 15% of Boomers are interested.

A recent survey by Charles Schwab reveals that exchange-traded fund (ETF) investors demonstrate significantly higher confidence in their investments than non-ETF investors. The annual ETFs and Beyond study highlights this growing sentiment among ETF holders, particularly amid economic uncertainties.

In Schwab’s research, 75% of ETF investors think that their portfolios are prepared for severe market conditions, such as a deep recession or other events that may occur, while only 58% of non-ETF investors have such confidence. This trend is quite striking as it shows that 73% of ETF investors are optimistic about the market, while 62% of those without ETFs are also optimistic.

Moreover, both groups are optimistic about attaining their expected investment returns. Interestingly, 97% of ETF investors stated that they are confident, while 91% of non-ETF investors also stated the same. David Botset, the Managing Director of Schwab Asset Management, pointed out that ETF investors usually invest in it for the long haul and do not easily divert from their investment strategy regardless of market conditions.

Actively Managed ETFs Gain Traction Among Investors

The investors in ETFs have not changed their investment strategies significantly due to market fluctuations, inflation risks, and geopolitical risks. Some respondents said these factors did not affect their investment decisions or made them invest more in ETFs.

This research showed that most ETF investors follow the conventional 60/40 portfolio, where 60% of the investment is placed in equities and 40% in bonds. Interestingly, the youngest investors, including the millennials, are only slightly more aggressive, with 54% of their investments in equities and 46% in fixed income. In addition, 44% of millennials expect to increase their allocation to fixed income in the next year, which is higher than Gen X and baby boomers.

While less than one-third of ETF investors have actively managed ETFs in their portfolios at the moment, 86% of them are ready to consider actively managed ETFs in the next two years. The findings also show that equities remain the most favoured asset class for future investments, with 55% of ETF investors intending to invest in stocks through ETFs. Other significant preferences are cryptocurrencies at 45%, fixed-income securities at 44%, and real assets at 40%.

ETFs Become Integral Part of Investment Plans

The Schwab survey reveals the increasing appreciation of ETFs as a vital part of investment strategies. More than 91% of ETF investors consider that these products are essential for their investment plans, and 65% of them plan to increase their ETF investments in the next year. 

Survey respondents think they will dedicate 37% of their investment to ETFs in the next five years compared to the current 27%. On the other hand, only 45% of the non-ETF investors said that they might consider buying an ETF in the next two years, which points to a change in perception regarding ETFs. Eric Balchunas, a top expert on ETFs, called the findings “pretty stunning.” 

Almost half of Schwab’s respondents said they plan to invest in crypto ETFs, more than bonds, international, alts. Pretty stunning. https://t.co/F9iV4ZGjxf pic.twitter.com/VnnoxioGIK

— Eric Balchunas (@EricBalchunas) October 10, 2024