Characteristics of ETF Owners: Exploring the Role of Investor Knowledge, Fee Aversion, and Financial Advice Seeking

Using the 2015 NFCS Investor Survey, this study investigated the relationship between individual financial characteristics and ETF ownership. While ETFs offer many benefits in comparison to traditional mutual funds, only 22% of investors held ETFs in their investment portfolios. Those ETF owners had higher financial knowledge than their non-ETF owning counterparts, supporting bounded rationality as a driver of investment behavior. The source of the financial knowledge, whether subjective or objective, made no significant difference. Seeking financial help through a financial advisor and aversion to fees were not significant variables in explaining the variation in ETF ownership while increased risk tolerance and financial satisfaction were associated with ETF ownership.