September 09, 2024

2024 FTSE Russell Retail Investor Survey

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  1. Overview
  2. Topics
  3. Related resources
  4. The right ETF starts with the right index
  5. Research and Insights

Retail investors’ increasing use of index funds is leading to more sophisticated portfolios and a sharper understanding of the benefits of index investing.

Between May 30 and June 6, 2024, FTSE Russell partnered with independent research firm 8 Acre Perspective to conduct a thought leadership survey with over 1,000 US retail investors.

Our survey reveals how index funds are changing the nature of investing, giving retail investors the tools to become better at profiting from financial markets. Led by the Millennial generation, they’re benefiting from the potential of portfolio diversification, lower fees and risk management. In other words, index funds are empowering them to evolve and enhance investing strategies.

    • Having a financial advisor is valued. Investors are full of praise for their advisors, citing shared values, comprehensive financial planning and investment performance as what they value most.
    • Investors guided by advisors are more confident about opportunities for success in the stock market.
    • Retail investors are using index funds to build more sophisticated portfolios. Efficiency and ease-of-use are enabling them to incorporate the investing techniques of professional investors such as family offices, endowments and other institutional investors.
    • The top reason for using, or planning to use, index funds remains performance over time, however, there are big jumps in the proportion of investors using index funds for other benefits such as portfolio diversification and for low fees. There are also large increases in investors using index funds to manage portfolio risk.
    • This empowerment is making investors more assured. Investors in index funds are three times more likely to be optimistic about the performance of their portfolios over the next 12 months than those who are aware, but don’t own index funds.
    • Investors are nervous about the economy, the stock market and the uncertainty that’s generally associated with a presidential election.
    • When it comes to investing concerns, the US presidential election tops the list, closely followed by the potential for stock market volatility and the impact of a potential recession.
    • Just as Millennials are known for pushing into newer areas of investing such as alternatives and cryptocurrencies, so too they’re leading the surge in index fund investing.
    • Index fund use has grown over the two years since our last survey in 2022 across all age groups, rising from 27% of all investors to 39%. Yet Millennials’ ownership has grown the most—up from 27% in 2022 to 45% in 2024. Younger Millennials are most enthusiastic of all. More than half (51%) of those aged 28-34 invest in index funds.
    • Reflecting this, the Millennials who invest in index funds have the highest allocations in their portfolios. For instance, their average portfolio allocation to index funds in 2024 is 44%, notably higher than 36% of Baby Boomers (60-78) and 37% of Gen-X (aged 44-59) who invest in index funds. 
    • As index fund assets continue to take market share, fundamentally changing the nature of investing, advisors have a distinct opportunity to enhance their high levels of service by educating and guiding investors.
    • While index fund investing is surging, those retail investors who haven’t invested yet blame their lack of understanding and express a desire for more information from their advisors.
    • Building on the strong evidence that advisors are trusted to deliver a high-quality service, they have a clear opportunity to engage with clients through education.
    • With retail investors steadily increasing their use of index funds, advisors can help them to understand the benefits. They have a particular opportunity to engage with Millennials, who are leading the move into index investing but using advisors less.

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