Millennials and members of Generation X are more likely to allocate new investments to ETFs than older generations, according to new research from Toronto-based BlackRock Asset Management Canada Ltd.
Overall ETF usage is expected to continue its strong rate of growth this year, but the biggest push will come from younger Canadians, with 44% of ETF investors being 50 years of age or younger. The BlackRock Canada survey found that 85% of millennials and 76% of Gen Xers likely to invest in ETFs compared with 44% of older generations.
Although one-third of Canadians currently own ETFs, knowledge gaps still persist, and age can be a differentiating factor in terms of where investors look for information. The survey found that 38% of millennials and 41% of Gen Xers are most likely to go to financial websites vs 30% of baby boomers and 21% of the even older cohort of “silvers.”
Instead, older investors showed a preference for seeking advice from financial advisors, with 49% of silvers turning to a professional advisor, stockbroker or accountant to learn about ETFs vs 46% of baby boomers, 35% of Gen Xers and only 28% of millennials.
“This new type of investor tends to be younger, tech-savvy and more confident about finances when it comes to ETFs, meaning that we’re looking for new ways to ensure we’re meeting the needs of this growing base of emerging investors,” says Warren Collier, head of BlackRock Canada’s iShares division in a statement.
“While we’re seeing that Canadians are keen for more information on ETFs,” he adds, “we want to help more investors understand the important role that ETFs can play in building better portfolios for the future.”
The survey also found some distinctions between ETF owners and non-owners. For example, ETF owners were less likely than non-owners to use an advisor (68% vs 79%). ETF owners were also more likely to be invested in financial markets than to hold high cash reserves, with an average of 19% of their portfolios in cash. Non-ETF owners held 35% in cash on average.
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