Cryptocurrency is becoming a popular choice among ETF investors, especially Millennials, according to the latest survey by Charles Schwab. The survey, conducted between July 2 and July 20, gathered insights from 2,200 investors, including 1,000 ETF investors and an additional 200 respondents who began investing post-2020.
The study found that 62% of Millennial ETF investors are planning to allocate a portion of their portfolios to digital assets in the coming year. This marks a significant shift in investment preferences, as crypto ranked as the second most popular asset class overall among all investors surveyed. This is a significant increase compared to older generations, where only 44% of Gen X and 15% of Boomer investors expressed similar intentions.
Millennials are particularly interested in leveraging alternative asset classes such as cryptocurrencies, with 39% of them eyeing spot crypto ETFs. This demographic is more likely to pursue high-risk, high-reward strategies compared to Gen X and Boomers. Additionally, Millennials are also more likely to embrace specialty ETFs, including those focused on long/short strategies, volatility hedging, and smart beta products.
Despite their interest in digital assets, Millennials are cautious investors. About 66% of Millennials reported feeling confident in their ability to outperform the market but expressed concerns about portfolio recovery in the event of a recession or a “black swan” event. However, many see crypto as a way to diversify their portfolios, hedge against inflation, and take advantage of growth opportunities.
The study also revealed that nearly half of Millennials are interested in real assets like commodities and infrastructure, as well as bonds and fixed income. Additionally, Millennials are more likely to personalize their portfolios by investing in companies and funds that align with their social, environmental, or ethical values.
Despite the volatility in the market, nearly 40% of Millennials remain bullish on cryptocurrencies in the long term. As financial institutions like Schwab introduce more crypto and blockchain-based products, Millennials are becoming more familiar with these assets and are interested in exploring new investment methods like direct indexing.
Overall, the survey indicates that digital assets are becoming a foundational element of the portfolios of the next generation of investors. As crypto continues to gain traction, financial institutions are expected to innovate with ETFs and other financial products tailored to the preferences of a younger, more tech-savvy investor base. This shift signifies a broader trend towards alternative asset classes and personalized investment strategies among Millennial investors.
