Crypto top two choice for ETF investors in latest Charles Schwab survey

Crypto continues to gain momentum among younger investors, with 62% of Millennial ETF investors planning to allocate a portion of their portfolios to digital assets in the coming year, according to Charles Schwab’s 2024 ETFs and Beyond Study.

For all investors surveyed, crypto ranked as the second most popular asset class, signaling a major shift in investment preferences. This marks a significant uptick in interest compared to older generations, where only 44% of Gen X and 15% of Boomer investors expressed similar intentions.

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 Millennials are particularly keen on leveraging alternative asset classes such as cryptocurrencies, which have become the second-most popular investment choice for this group, just behind US equities.

The report noted:

“Millennials are not only looking to diversify but also to invest in markets that reflect future trends and technological innovations.”

With 39% of Millennial investors eyeing spot crypto ETFs, this demographic is significantly more likely to pursue high-risk, high-reward strategies compared to Gen X (24%) and Boomers (11%).

Cautious optimism

The appeal of digital assets for Millennials appears to align with broader investing patterns identified in the report. This generation is also more likely to embrace specialty ETFs, including those focused on long/short strategies, volatility hedging, and smart beta products.

In addition to cryptocurrencies, Millennials showed a 45% interest in real assets like commodities and infrastructure and a 47% interest in bonds and fixed income.

However, the survey also revealed caution among younger investors, with roughly 66% of Millennials reporting feeling confident in their ability to outperform the market but acknowledging concerns about portfolio recovery in the event of a recession or “black swan” event.

This cautious optimism is influencing their investment decisions, with many prioritizing diversification through crypto as both a hedge against inflation and a growth opportunity. Meanwhile, crypto has become an essential component of Millennial portfolios for reasons beyond speculation.

Nearly half of those surveyed said their interest in digital assets stems from a desire to align their investments with personal beliefs and values, further signaling a shift in how this generation views wealth creation.

Millennials are also the most likely to personalize their portfolios, with 46% planning to invest in companies and funds that reflect their social, environmental, or ethical values.

Bullish outlook despite volatility

The study highlighted the growing role of education in driving investment decisions among Millennials. As more financial institutions, like Schwab, introduce crypto and blockchain-based products, the availability of information on these assets is expanding.

In fact, Millennials were more familiar with direct indexing and similar customization options compared to older generations, with 80% expressing an interest in exploring this investment method further.

Despite a volatile market, the study found that nearly 40% of Millennials remain bullish on cryptocurrencies, a reflection of their long-term outlook on the asset class. The Schwab survey suggests that as crypto products evolve, they will continue to attract younger investors eager to diversify and personalize their portfolios.

With crypto gaining traction, financial institutions are expected to further innovate with ETFs and other financial products tailored to the preferences of a younger, more tech-savvy investor base. The findings indicate that digital assets are not just a passing trend but becoming a foundational element of the portfolios of the next generation.

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