The ETF Investor Study also found that eight in ten investors who currently own ETFs say they will invest more into them over the next two years.

The survey consisted of more than 1,000 individual investors with at least $25,000 in investable assets and familiarity with ETFs. The study was designed to gauge individual investors’ attitudes toward and understanding of ETFs, and how or if they would use them as part of their investment portfolios. Nearly two-thirds of all respondents to the survey own ETFs; the other third plan to invest in an ETF in the next two years.

The study shows investors’ appetite for ETFs is rising in several ways: in addition to the 44% who plan to invest more, just two percent say they will decrease their ETF investments. According to the study, the increased interest is driven in part by a distinct set of benefits unique to the product. ETF owners say the biggest benefit of ETFs is that they trade like stocks, while those considering them cite diversification as the top benefit.

But the study also offers insights on the gaps that still exist in investors’ knowledge about ETFs. Forty-six percent of investors surveyed call themselves ETF “novices,” and one-fourth of all respondents indicate that they do not understand their costs or how to best use them. Thirty-one percent of respondents say they don’t know how to use ETFs across asset classes, and more than 25% know nothing about the difference between actively managed and index-based ETFs.

“Individual investors are attracted to the efficiency and flexibility of ETFs, but many do not have a solid grasp on how they work,” said Beth Flynn, vice president of ETF Platform Management at Charles Schwab. “As more flavors of ETFs come to market, it is clear that the emphasis on education will be more important than ever.”

Half of ETF owners surveyed say they use these products to access specific sectors or markets, and 44% use them to invest in core asset allocation strategies. Sector ETFs were cited as the type most frequently evaluated for purchase, followed closely by equity and international ETFs. Thirty-four percent of respondents also report interest in commodity ETFs, and more than one in four (26%) say they are considering fixed income funds for their next ETF purchase.

The survey finds that ETFs comprise, on average, almost 20% of ETF investors’ portfolios, and individual funds are held by investors for an average of 1.5 years.

The study reports that the cost of an ETF is the primary factor that matters to investors when choosing an ETF, followed by a fund’s performance history and the reputation of the ETF sponsor. When asked which specific components of cost are most important, respondents named the fund’s expense ratio first, followed by trade commission. In fact, 43% of investors say that the ability to trade a fund commission-free is important but not the only factor to consider when choosing an ETF. Premium and discount pricing, and a fund’s bid/ask spread, ranked third and fourth respectively.