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Uncovering the profile of passive exchange-traded fund retail investors

Author

Listed:
  • D’Hondt, Catherine

    (Université catholique de Louvain, LIDAM/LFIN, Belgium)

  • Petitjean, Mikael

    (Université catholique de Louvain, LIDAM/LFIN, Belgium)

  • Elhichou Elmaya, Younes

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.

Suggested Citation

  • D’Hondt, Catherine & Petitjean, Mikael & Elhichou Elmaya, Younes, 2025. "Uncovering the profile of passive exchange-traded fund retail investors," LIDAM Reprints LFIN 2025007, Université catholique de Louvain, Louvain Finance (LFIN).
    • Handle: RePEc:ajf:louvlr:2025007
    DOI: https://doi.org/10.3917/fina.pr.040
    Note: In: Finance : revue de l'Association française de finance, 2025
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