VII. No Diverse Assets

Retail investors often struggle to access diverse asset classes like exchange-traded funds (ETFs), stocks, and derivatives due to high liquidity requirements and significant entry costs. For example, a study by the Investment Company Institute found that the average expense ratio for ETFs was 0.44% in 2021, which can add up over time and reduce returns for retail investors with smaller portfolios.

Liquidity in ETFs is also complex, depending on both the liquidity of the underlying assets and the trading volume of ETF shares, which can lead to higher costs and reduced access for retail investors when disruptions occur. Additionally, high minimum investment thresholds and the complexity of some financial products discourage many from participating, limiting their ability to effectively diversify their portfolios.