In a survey conducted by the data provider, 71 per cent of prospective ETF investors said low cost is "very important" to them, compared with 57 per cent last year.
Hortense Bioy, director of European passive fund research at Morningstar, said: "In a world of low expected returns in all asset classes, it comes as no surprise to see greater focus on costs, and costs associated with ETF investing are no exception.
"The Retail Distribution Review and entrance of ultra-competitive providers such as Vanguard in the ETF marketplace, have clearly contributed to further raising the UK investor's awareness of the low cost nature of ETFs."
Meanwhile the survey also revealed that among investors who currently own ETFs, the majority hold less than 20 per cent of the value of their overall portfolio in them. Only 10 per cent of individual investors have an ETF portfolio weighting of greater than 50 per cent.
And when it comes to choosing the replication method for ETFs, 85 per cent of investors said they preferred physical replication over synthetic replication, marking a firm favourite.
And intraday trading has grown as an important feature of ETFs among both current and prospective ETF investors, with 40 per cent and 21 per cent, respectively, citing ETFs’ intraday liquidity and trading as being "very important" to them. These numbers are up compared with last year's survey, which showed 28 per cent and 16 per cent for current and prospective buyers, respectively.
