Retail investors are embracing exchange-traded funds and the exposure they can provide to more specialised markets, according to recent client data from TD Ameritrade.
Close to 30 per cent of ETF holdings among TD Ameritrade retail clients provide exposure to commodities and alternatives.
Around 45 per cent of ETF holdings provide exposure to US equities, about 15 per cent provide international equity exposure and bond ETFs make up 10 per cent of ETF positions.
"Over the past five years, our retail client ETF holdings have more than doubled," says Lule Demmissie, managing director of investment products and retirement, TD Ameritrade. "And, more than ever, we’re seeing investors take advantage of the exposure to more specialised markets that ETFs can provide. More investors, young and old, are using ETFs in increasingly sophisticated ways."
There is a correlation between age and the likelihood of having ETFs in a portfolio, and a slight difference in what type of ETFs might be held:
Age 26-35 – 12.7 per cent of assets are held in ETFs, and more likely than other age groups to hold international ETFs
Age 36-45 – 11.3 per cent of assets are held in ETFs
Age 46-55 – 8.6 per cent of assets are held in ETFs
Age 56-65 – 7.3 per cent of assets are held in ETFs, less likely to hold US stock ETFs; and more likely to hold bond and metals ETFs
Age 66-75 – 6.2 per cent of assets held in ETFs, even less likely to hold US stock ETFs; and even more likely to hold bond and metals ETFs
Since its inception nearly 20 years ago, the ETF market has expanded to provide exposure to specific markets, such as international markets, fixed income and commodities, which, while having unique risks, can help round out a diversified long-term investment portfolio, and investors are increasingly taking advantage of the possibilities.
