Speaking at the Investment Company Institute (ICI) 2nd Annual ETF Conference in Nashville, Shelly Antoniewicz, Chief Economist at the Investment Company Institute, shared key insights on the continued growth and evolving use of exchange traded funds among US retail investors in an interview with Deborah Fuhr of ETFGI for ETF TV.
The conference attracted a large audience of industry participants and highlighted the increasing importance of ETFs in portfolio construction across both institutional and retail segments.
Retail ETF adoption continues to expand
Antoniewicz noted that 20 million US households now own ETFs, representing approximately 15% of all US households. This marks a significant increase from 2010, when only 3 million households (3%) held ETFs, underlining a sustained trend of rising adoption.
“While adoption is not yet universal, the growth over the past 15 years has been substantial,” said Antoniewicz.
Broad demographic appeal across age groups
Contrary to common perceptions, ETF ownership in the US spans a broad demographic base:
· The median age of ETF investors is 51
· 15% of ETF investors are under 35
· 14% are aged 65 and above
· Ownership is broadly distributed across age brackets
“This data highlights that ETFs are being adopted across generations, not just by a single demographic group,” Antoniewicz explained.
Key drivers: cost, diversification and flexibility
According to ICI research, the primary drivers behind retail ETF adoption include:
· Cost efficiency
· Diversification benefits
· Intraday trading flexibility
Investors value the ability to trade ETFs throughout the day, even if they do not actively trade, as well as the wide range of exposures available for portfolio construction.
Growing role of ETFs in retirement portfolios
ETFs are increasingly being used as part of long-term savings strategies:
· 60% of ETF-owning households hold ETFs within IRAs
This trend highlights the growing role of ETFs as core building blocks for retirement investing in the US.
Education remains a key barrier to entry
Despite the strong growth, Antoniewicz identified financial literacy and understanding of ETF trading mechanics as a barrier, particularly for newer and younger investors.
Key challenges include:
· Understanding liquidity
· Navigating bid-ask spreads
· Using appropriate order types
While educational resources and digital platforms are helping address these gaps, trust in information sources—particularly online communities and social forums—remains critical.
Outlook: younger investors to drive future growth
Looking ahead over the next three to five years, Antoniewicz emphasised that millennials and Gen Z investors will be the primary drivers of ETF growth:
· Millennials already represent approximately one-third of ETF-owning households
· As these cohorts enter their peak earning years, ETF usage is expected to increase significantly
· Financial advisors continue to expand ETF usage, with ETF allocations rising to about 50% of client assets among fee-based advisers, up from 17% a decade ago
In addition, intergenerational wealth transfer is expected to reinforce ETF adoption, as younger investors are likely to allocate inherited assets into familiar ETF products.
Conclusion
The interview underscores the continued evolution of ETFs from a niche investment vehicle to a mainstream solution for retail investors, supported by strong structural drivers including cost efficiency, portfolio versatility, and increasing advisor adoption.
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