Charles Schwab’s latest study offers a clear snapshot of exchange-traded fund (ETF) trends in 2025. The adoption is accelerating, and this market segment is inching from the “mainstream” to “default.”

In a study titled “ETFs & Beyond,” Schwab surveyed 2,000 experienced investors, evenly split between ETF and non-ETF users. As many as 93% of ETF investors said this investment vehicle is a necessary part of their portfolio. Furthermore, 75% are “extremely likely” to buy more in the next two years.

A Shift Among New Investors

Allocation trends reinforce this conviction. Investors expect ETFs to make up 34% of portfolios within five years, up from 27% today--an upward glide path remarkably consistent across generations.

The shift toward simplicity is more pronounced in this decade. Two-thirds of ETF investors began buying only after 2020, and yet they’ve embraced ETFs with the same intensity as tenured holders.

In 2025, 62% of all ETF investors say they would consider putting their entire portfolio in ETFs, up sharply from 2020. That conviction is strongest among newer investors--an important signal for the industry’s future.

The study also notes an evolving portfolio composition. Over half of investors now blend core ETFs with tactical or niche exposures, and specialty ETF interest continues to expand. Dividend ETFs remain dominant, but single-stock, thematic, long/short, and even spot crypto ETFs are gaining wider appeal.

Schwab also found that ETF investors increasingly use ETFs to reach asset classes once considered inaccessible. These assets include commodities, private equity, and even private credit. The broadening use continues to blur the lines between traditional indexing and sophisticated strategy deployment.

The Current Focus

A fresh development in 2025 is the resurgence of fixed-income ETFs. After repositioning portfolios during the rate-hiking cycle, 40% of ETF investors expect to increase their bond ETF allocations.

Thus, funds like Vanguard Intermediate-Term Bond ETF (NYSE:BIV) or Fidelity Total Bond ETF (NYSE:FBND) might be currently in investors’ focus. The reasons include both diversification and the expectation that higher-for-longer rates will continue to reshape return opportunities.

What has not changed is the centrality of cost. Cost remains the top factor across generations, though Millennials are more likely than Gen X or Boomers to rank it as the single most important consideration.

Even so, investors are open to paying more for active ETFs when they offer downside protection, access to alternative strategies, or exposure to managers they trust.

Demographics Breakdown

Demographic differences are where the 2025 landscape becomes most distinct. Millennials are the ETF power users, allocating the highest share of their portfolios (30% today, rising to 36% in five years) and overwhelmingly planning to increase allocations in 2025. They also have an interest in cryptocurrencies, tangible assets, alternatives, and specialty ETFs.

Millennials self-identify as tactical investors with the skills to outperform the market--an attitude that sharply contrasts with Boomers, who continue to favor buy-and-hold strategies and maintain more traditional asset-class exposures. Gen X sits squarely in the middle, blending tactical tendencies with the conservatism of later-career planning.

Another key generational trend is personalization. Across the entire sample, investors show strong demand for greater control, customization, and tax optimization--but Millennials and Gen X are significantly more eager than Boomers to explore direct indexing.

Nearly one-third of ETF investors say they are “very likely” to adopt direct indexing within 12 months, showing that portfolio personalization is emerging as the major market frontier.

Price Watch: SPDR SSGA IG Public & Private Credit ETF (NYSE:PRIV) is up 2.13% year-to-date.

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