Global assets and ETFs reached a record $12.4 trillion at the end of the third quarter, according to Morningstar. Additionally, according to a report by Charles Schwab, 65% of investors plan to increase their ETF investments within the next five years.

David Botset, Head of Innovation and Stewardship at Schwab Asset Management, is joining Wealth! to discuss the growth of ETFs.

“What we see from ETF investors is that they are very confident in the decisions they make. And I think that’s the reason for a lot of the inflows we’re seeing this year,” Botset tells Yahoo Finance. He points out that many investors are repositioning themselves into fixed income as the Federal Reserve has begun its rate-cutting cycle. He also explains that investors use ETFs to guard against associated volatility risks.

Botset adds that ETFs are a great way to reduce investment costs. “The most important deciding factor when selecting ETFs is cost. I think investors are not only looking at how to diversify their portfolio, but also at how can I reduce the cost of investing.”

He points out that Millennials in particular have shown “a higher propensity to use ETFs,” while older generations typically stick with mutual funds. He believes millennials are more interested in ETFs because they are less expensive and because they provide an accessible entry point for investing in the market.

For more expert insights and analysis on the latest market activity, visit the Wealth section here.

This article was written by Melanie Riehl