The ETF world might be reaching its “all-in” moment. A new survey from Charles Schwab Asset Management reveals that 62% of ETF investors can see themselves holding an all-ETF portfolio, and nearly half believe it could happen within the next five years.
That’s quite a move from when ETFs were considered only passive building blocks. Today, investors are increasingly considering ETFs as full-stack solutions, with exposures running the gamut from total market indexes to niche thematic bets.
According to the Schwab report, investors are now using ETFs not just to fill gaps, but to build entire portfolios, reflecting growing confidence in their generally low costs and transparency.
Fixed Income ETFs Gain Ground
One key finding is that 40% of all ETF investors plan to increase their fixed-income allocations during the next year. That represents a significant shift in perception: Bond ETFs, once too complex for many investors, have emerged as a steady core of portfolios.
One of the popular choices among advisors is the Vanguard Total Bond Market ETF (NASDAQ:BND), which grants exposure to U.S. Treasuries, corporate debt, and mortgage-backed securities in one convenient wrapper. With an expense ratio of just 0.03%, it’s the natural choice for investors seeking steady income inside a low-cost, ETF-only structure. According to data aggregated by VettaFi, BND saw inflows of more than $17 billion this year to date.
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Core ETFs Take Center Stage
The move toward all-ETF portfolios hinges on simplicity and breadth. For many, the iShares Core S&P Total U.S. Stock Market ETF (NYSE:ITOT) represents that foundation-offering exposure across large-, mid-, and small-cap U.S. equities. VettaFi-aggregated data shows that ITOT pulled in more than $4 billion this year.
The Schwab report says such “core ETFs” are increasingly replacing diversified mutual funds by letting investors control asset allocation directly rather than relying on decisions by a fund manager. “Overall, ETF investors expect to fund new ETF investments by selling mutual funds, individual stocks and bonds, and by investing new money (e.g., new cash or contributions not invested yet),” the report stated.
Active ETFs And Thematic ETFs Add Flavor
Moreover, Schwab’s results indicate that 65% of investors say they will add active ETFs this year, while almost half appreciate that ETFs give them access to markets they wouldn’t normally reach.
That appetite for targeted exposure feeds into the popularity of ETFs such as the Technology Select Sector SPDR Fund (NYSE:XLK) and the iShares U.S. Technology ETF (NYSE:IYW). Both capture the growth potential of US tech giants, an area that continues to dominate ETF inflows.
From “Fund Of Funds” To “Fund Of Ideas”
The Schwab study, however, underscores a generational trend: it’s younger investors who are leading the charge toward ETF-only investing. In fact, for them, ETFs are less about indexing and more about customization like building portfolios that reflect both risk appetite and personal beliefs. If the trend continues, ETFs might soon move from portfolio ingredients to being the portfolio itself.
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