Young Canadians are more likely to adopt ETFs than their elders, according to a new study. They’re also more likely to access these products through discount brokerage platforms than through a financial advisor.
The survey was conducted by market research firm Sago on behalf of the Canadian ETF Association (CETFA).
It found that 22% of Canadians now own an ETF — and younger investors are especially drawn to these products. ETF adoption was highest among Canadians aged 18–34 (24%) and 35–54 (25%). By comparison, 17% of Canadians aged 55 and above said they invest in these products.
The study also highlighted generational differences in terms of accessing ETFs. Canadians aged 55 and above are most likely to purchase ETFs through a financial advisor, with 51% reporting advisor-led purchases. Among the 18–34 age group, 27% of investors said they access these products primarily through an advisor.
Younger investors are more likely to turn to discount brokerage platforms, the survey found, with 48% of Canadians aged 18–34 saying they purchase ETFs through these channels. By contrast, just 15% of Canadians aged 55 and above reported gaining access to ETFs through self-directed channels.
The findings indicate a clear need for advisors to adapt to evolving investor preferences in the digital age, said Eli Yufest, executive director of CETFA, in an interview.
“If I was an advisor, … I would find a way to become more relevant” to the younger generations, he said.
As part of this reinvention, he said advisors should offer a range of investment options for clients to choose from.
What investors consider before selecting an ETF
More than half (56%) of Canadians said fees are the main factor they consider when selecting an ETF. Fees were cited as a key consideration by 53% of investors between the ages of 18 and 34, 61% of investors in the 35-54 age group, and 50% of investors aged 55 and above.
Meanwhile, ease of buying ETFs through an investment platform was cited as a key consideration by 35% of Canadians aged 35–54, and 34% of those aged 18–34. Among Canadians aged 55 and above, 19% cited ease of access as an important factor when choosing an ETF.
Past fund performance was another determining factor, with 43% of respondents reporting it as a key consideration when selecting an ETF. About 37% of investors in the 18-34 age group cited it as important, while 46% of investors did in the 35-54 cohort. By comparison, among the 55 and above crowd, 48% said past fund performance was a key consideration.
The study also explored investor preferences regarding domestic and foreign-listed products.
Among those who invest in ETFs, more than a third (36%) of them hold both U.S.- and Canadian-listed ETFs. Additionally, 4% of Canadians reported owning exclusively U.S.-listed ETFs.
At the same time, 16% of investors said they were unsure whether the ETFs they owned were listed in Canada or the U.S.
Despite the cross-border ETF ownership, the study showed that investors cared about the listing jurisdiction of their investments. Nearly three-quarters of Canadians (72%) said it was important that an ETF be listed in Canada, with that figure rising to 79% among Canadians aged 55 and above.
The survey of 3,043 Canadians was conducted from Jan. 27 to Feb. 2.