Younger investors are using ETFs to gain easy access to foreign markets

18 September 2015

Research from Selftrade shows that those aged 25-45 are favouring the usage of ETFs

The latest knock to financial markets in China has not deterred younger investors from investing in emerging markets, according to exclusive research from Selftrade involving 203 of its self-managed users.  Almost half of its younger investors aged 25-45 bought and sold ETFs during China’s market turbulence, whilst only seven percent of those over 45 were doing the same.

This is part of growing evidence that younger investors are increasingly recognising the merits of the asset class as a way of gaining exposure to a number of different markets and sectors.

Forty-nine percent of 25-45 year olds prefer using ETFs to gain exposure to emerging markets compared with just 15% of those over 45, according to the data, explaining the large difference in trading activity for the groups during the turbulence.  Many older investors still prefer actively managed mutual funds for a large portion of their investing.

Richard Donegan, Managing Director of Selftrade ,  said: "There are a number of great benefits to be gleaned from including ETFs in a portfolio, not least cost effectiveness and transparency…  and also opportunities for diversification, access to global sectors which can be difficult to invest directly in,  which is very attractive to younger investors.   However, investors should be aware of the risks before they invest and read the prospectus.”

He added: "The older generation have been successfully investing in mutual funds since the mutual fund boom of the 1980s…  Over the past few decades, they've come to understand how this works, and feel comfortable with it, despite some funds which can carry high annual management fees."

Selftrade's research shows that 63% of its younger [aged 25-45] self-managed customers have held or hold ETFs currently, compared with just 21% of those over 45; whilst 67% of younger investors see ETFs playing a greater role in their investment strategies over the next 3 years, contrasted with just 21% of the over 45s.

This data from Selftrade also showed, however, that 34% in total of their self-managed customers are not investing in ETFs because they do not understand them:

"The fact we see a significant proportion of our customers not taking advantage of ETFs, due to a lack of understanding, demonstrates the vital need to educate investors as to the benefits of the asset class. Selftrade is committed to advocating the merits of ETF investing as part of a well balanced portfolio", Richard Donegan said.

Some key findings from Selftrade’s survey of their self-managed customers:

34% of customers don’t understand ETFs 63% aged 25-45 have held or hold ETFs currently 21% of over 45s have held or hold ETFs currently 67% aged 25-45 think ETFs will play a larger part of their investment strategy over the next 3 years 21% of over 45s  think ETFs will play a larger part of their investment strategy over the next 3 years 44% aged 25-45 bought and sold ETFs during China’s market turbulence Seven percent of over 45s bought and sold ETFs during China market turbulence.

Younger [25-45] investors prefer ETFs for: 
Emerging market exposure (49%)

Older [45+] investors still prefer actively managed funds over passive funds and ETFs for: 
Emerging market exposure (55%)

From 15 September to 31 December 2015, trading commission on ETFs placed through our Selftrade Dealing, ISA or SIPP account will be just £9.99.  More information about ETFs and the offer can be found at our new education centre.


For more information please contact:

Hudson Sandler – 020 7796 4133 
Andrew Nicolls 
Alex Clelland 
Joseph Burgess

Equiniti/Selftrade – 07483 169 502 
Ingrid Smith 

Notes to Editor: 

About Equiniti 
Equiniti works with some of the best known brands in the UK including around 50% of the FTSE 100, supporting 18 million shareholders and 7.4 million pension scheme members.

Equiniti has been providing share dealing services in the execution-only market through its Selftrade and Shareview Dealing brands for more than 10 years, maintaining approximately 450,000 customer accounts.

Selftrade is one of the UK’s leading execution-only online stockbroking services and administers around £5billion of customer assets.  We also safeguard circa £13billion of assets for retail customers associated with Equiniti’s corporate share registration services under a Corporate Nominee, which services some 3.5m accounts. Equiniti’s branded investment solutions, investment administration, systems and custody services are used by some of the industry’s leading providers.

Equiniti’s investment services are provided by Equiniti Financial Services Limited.

*Research was conducted by Selftrade - 203 users of execution-only investment services were surveyed.

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