Uncovering the profile of passive exchange-traded fund retail investors

D’Hondt, Catherine, Mikael Petitjean and Younes Elhichou Elmaya ()
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D’Hondt, Catherine: Université catholique de Louvain, LIDAM/LFIN, Belgium
Mikael Petitjean: Université catholique de Louvain, LIDAM/LFIN, Belgium

No 2025007, LIDAM Reprints LFIN from Université catholique de Louvain, Louvain Finance (LFIN)

Abstract: We profile retail investors in passive exchange-traded funds (P-ETFs) using both trading records and survey-based data on a large pool of individuals over nearly a decade. There is strong evidence that retail investors who trade P-ETFs have a distinct profile. Both the probability and the magnitude of P-ETF investing are driven by higher education and longer trading experience. P-ETF investors self-report higher financial literacy, a lower return objective, lower risk tolerance, and a longer investment horizon. These investors are less overconfident, and their stock holdings show less home bias. Furthermore, the more active P-ETF users hold more concentrated stock portfolios and display lower stock portfolio turnover, pointing to a substitution effect between stocks and P-ETFs.

Pages: 45
Date: 2025-01-01
Note: In: Finance : revue de l'Association française de finance, 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ajf:louvlr:2025007

DOI: 10.3917/fina.pr.040

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