Even as the US ETF space reaches a new multitrillion-dollar high, a new wave of first-time investors is set to reshape the market, according to a new report from BlackRock.
The findings of BlackRock's inaugural “People & Money” report, drawn from a survey of more than 5,000 adults, point to a significant shift in how Americans are approaching investing, with ETFs emerging as the preferred onramp.
Cerulli has highlighted how assets in US ETFs now exceed $11 trillion, a surge fueled in part by $511 billion in new money from the first half of this year. BlackRock estimates that more than 24 million Americans now own ETFs, representing nearly one-fourth of investors nationwide.
BlackRock's report suggests that this number is poised to grow, with 19 million adults very likely to buy ETFs over the next year. Of those, 44% are expected to be first-time ETF investors, a group that skews younger and has lower average income than existing ETF holders. Seventy-one percent of these prospective new investors are under 45, and nearly seven in ten are expected to earn less than $100,000 annually.
The appeal of ETFs for these investors is clear. Survey respondents cited diversification (47%), ease of trading (40%), and the potential for better returns than traditional savings accounts (37%) as their top reasons for choosing ETFs.
Among those aged 35 to 44, convenience – specifically, the ability to buy a single fund – was the leading factor in ETF adoption. Younger investors, particularly those between 18 and 34, are also more likely to favor ETFs and cryptocurrencies, with 45% of that age group reporting crypto holdings. Focusing on current investors, 83% said they expect to invest in equity ETFs in the next year, while roughly one-third expressed interest in crypto (36%), commodities (34%), and bond ETFs (38%).
Amy Jenkins, head of US direct investing at BlackRock, said the data reflects a broader shift toward digital-first, accessible investing.
“We’re witnessing a pivotal moment as individual investors embrace ETFs for their efficiency and transparency,” Jenkins said in the report. She added that the predicted surge in first-time ETF investors highlights a move toward “simplicity, accessibility, and digital-first experiences.”
The report also reveals that recurring investment plans are gaining traction, with 38% of adults expressing interest in automated, regular contributions. The trend is especially pronounced among younger investors, who are 50% more likely than those over 35 to choose ETFs for their ability to facilitate small, recurring investments.
Despite the momentum, barriers remain. Many Americans still hesitate to invest, citing affordability, lack of knowledge, and fear of financial loss. These concerns are particularly acute among younger adults, with 57% of those aged 18 to 34 pointing to knowledge gaps, compared with 34% of those over 35.
The rise of ETFs is not limited to passive strategies. Active ETFs have also seen substantial inflows, which have pushed the segment above the $1 trillion mark according to Cerulli. Still, at least one report by Bloomberg suggests much of that growth appears to be driven by asset managers shifting to the ETF wrapper as more investors jettison their mutual fund holdings.
“Outflows in the overall active bucket are getting bigger," Jack Shannon, principal for equity strategies at Morningstar, told Bloomberg. "The ETFs are getting some flows, but it’s not reversing or slowing down the trend of money fleeing active equity [mutual funds] in general.”
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