Key Takeaways

• A new State Street survey said 45% of individual investors reported using ETFs in April, up from two years earlier.

• Those who don’t invest in ETFs cite not understanding the tax benefits, pricing, and difference between them and mutual funds

• Individual and institutional investors are generally bullish on the market for the latter half of the year

More individual investors use exchange-traded funds now than two years ago, according to new research, though they remain more popular with institutions.

Forty-five percent of U.S. individual investors reported using ETFs in April, according to a new survey from State Street Global Advisors, up from 40% in 2022. More than two-thirds of institutional investors used them, the survey said.

While investors generally like ETFs for reasons including diversification and expenses, many respondents to the survey said aspects of how they work — including their tax efficiencies, pricing and the difference between them and mutual funds — were difficult to understand, according to the survey.

The S&P 500 has generally risen this year, and nearly half of individual investors in the State Street survey said they're confident that it won't reverse direction—44% believe that the benchmark index will rise to finish the year, while 31% thought it would remain flat.

Institutional investors are similarly bullish about the market, with 49% predicting that the market will rise and only 11% believing it will decline.

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