Uncovering the profile of passive exchange-traded fund retail investors

D'Hondt, Catherine;Petitjean, Mikael;El Hichou, Younes;et.al.
(2025) Finance : revue de l’Association française de finance — (2025)

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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.
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D’Hondt, C., Petitjean, M., El Hichou, Y., & et al. (2025). Uncovering the profile of passive exchange-traded fund retail investors. Finance : revue de l’Association française de finance. Accepted/in-press. https://doi.org/10.3917/fina.pr.040 (Original work published 2025)