Lack of investor understanding hinders UK retail ETF adoption, according to WisdomTree

According to new research, only one in five (22%) of UK retail investors invest in exchange-traded funds (ETFs) or exchange-traded products (ETPs), with education being the main barrier.

According to a WisdomTree survey of 1,000 UK retail investors, 34% of those who said they did not invest in ETFs or ETPs said it was because they did not understand them.


According to the survey, European ETP assets under management increased to $1.6 trillion in 2021, owing to the popularity of their low costs and transparency.


However, the trend has not yet been replicated among UK retail investors, with 19% of those polled having never heard of ETFs or ETPs.

According to WisdomTree's survey, ETF and ETP popularity is on the rise, especially among those aged 18 to 34, with 34% of that age group investing in ETFs and ETPs compared to only 5% of those over 55.


Furthermore, 35% of those polled indicated that they would like to learn more about EFTs and ETPs from their investment platform and online broker.


Investors in general are eager for investment research and educational content, according to the survey, with 77 percent willing to consider a new investment platform or online broker if it provided a wider range of research and educational content.


The enthusiasm for research and education comes as 48% of respondents said the biggest risk to their investments was a global recession, and 40% said inflation.


"Despite the large growth in demand for ETFs and ETPs by professional investors, uptake has been slower in the retail market, and particularly in the UK when compared with other European countries like Germany," Adria Beso, head of platforms distribution, sales, Europe at WisdomTree, said.


"Confidence in knowing how and why to invest in ETFs and ETPs is low, leading to a lack of investment despite the fact they are easily traded, offer diversification and more transparency, and are low cost, all of which are important in the current economic backdrop."

By fLEXI tEAM