A new Charles Schwab survey of 2,000 investors highlights a powerful structural shift in how U.S. investors allocate capital. The results show that exchange-traded funds (ETFs) have become the dominant investment vehicle for both retail and institutional investors, and are now absorbing money from nearly every other asset class.
According to the data, 62% of ETF investors said they funded their new ETF purchases by selling individual stocks, while 52% drew funds from mutual funds. This represents a significant reallocation of capital from legacy investment models toward low-cost, flexible funds that offer easier access to diversified exposure.
Interesting look at where money into ETFs come from as per new Schwab survey of 2,000 investors. Interesting how many dif pools ETFs can draw from, including DI, which was supposed to disrupt ETFs, now ETFs disrupting them, as we predicted btw). Whole survey was super-optimistic,… pic.twitter.com/ta1RuUwL5K
— Eric Balchunas (@EricBalchunas) November 6, 2025
Bloomberg’s senior analyst Eric Balchunas shared the data, noting that this trend confirms a broader market transition. He pointed out that direct indexing (DI), initially predicted to compete with ETFs, is now being disrupted by them instead. “Whole survey was super-optimistic,” Balchunas wrote, emphasizing that nearly all respondents plan to increase their ETF allocations in the coming years.
This enthusiasm stems from ETFs’ unique mix of liquidity, tax efficiency, and low-cost diversification, benefits that have made them the go-to choice for investors seeking simplicity and transparency. As markets mature, ETFs are no longer viewed as passive tools; instead, they’ve become active portfolio components across both retail and institutional strategies.
The Schwab survey reinforces a clear message: they are not just attracting new capital, they’re transforming the structure of global investing. Traditional vehicles like mutual funds and direct indexing now find themselves on the defensive, as investors migrate toward the efficiency and accessibility that define modern ETF markets.