Top 3 Australian investor trends in 2017
Every 5 years the ASX’s Australian Share Ownership Study profiles investors to provide an understanding of retail investors, their perceptions, attitudes and behaviours. Sharesight has reviewed the report and identified three key trends, but first, here are the key figures:
Did you know?
- Australia has 11.2 million investors, or approximately 60% of the adult population
- Of those, 6.9 million hold investments through a financial exchange
- For the median household, approximately 20% of their weekly income comes from their investments
- Nearly half (45%) of investors reviewed their portfolios 3 times or fewer in the last year. (In contrast, only 19% of Sharesight users checked their portfolios 3 times or less in the past 12 months, with 71% checking their portfolio 9 times or more.)
Now let's dive into the three key trends among Australian investors:
Self-Managed Superannuation Fund (SMSF) use is booming
Over 15% or 1.1 million Australians claim to be members of a self-managed super fund, with the ASX finding that 30% of Australian adults that do not currently use an SMSF plan to set one up in the future -- a whopping 13% in the next 12 months. Of those planning to establish an SMSF, 65% of them already invest elsewhere in either on-exchange or other investment products.
There are now over 585,000 SMSFs in Australia according to the ATO -- meaning self-managed superannuation funds have grown by 20% in the last 5 years.
Among Sharesight users, 39% of our Australian customers on a paid plan currently track a SMSF using Sharesight.
Investors are highly risk averse, not diversified
Australian investors are highly risk averse, with 70% seeking stable, reliable or guaranteed returns -- this is even higher among millennials with 81% of investors under 35 seeking guaranteed or stable returns.
Diversification is a useful way to manage risk, yet the level of diversification within Australian investors portfolios is low, with 46% of investors claiming to hold a diversified portfolio. Of those claiming to hold a diversified portfolio, they hold an average of 2.7 investment products (shares, property and/or cash typically). Some 40% of respondents to the ASX study said they weren’t diversified, with an average of 1.6 products.
Alarmingly 75% of Australian share owners only own Australian shares. Given how top-heavy the ASX is (with the top ten shares accounting for 43% of the market value and 60% of the value of the ASX made up by companies in the finance, materials or real estate sectors), the vast majority are really only invested in a handful of companies and sectors.
Fortunately ownership of international shares is increasing, with the nearly 8% of the adult population surveyed by the ASX holding shares listed on an international financial exchange, up from 5% in 2014.
Millennial Investors almost double in 5 years
Millennial investors are smashing the myth that they are imprudent investors, spending all their income buying expensive cafe breakfasts. Young investors (18-24yo) now make up 20% of all investors in Australia, doubling since 2012. Similarly the number of ‘Gen Y’ investors (25-34yo) has boomed over the same period increasing from 24% to 39% of the Australian investor population.
Millennial investors are highly risk averse, with 4 in 5 young investors (18-25) preferring guaranteed or stable investment returns, making them the most risk averse of any age group among Australian investors.
Young investors are more digitally savvy, willing to embrace automated investment advice ‘robo-advice’ platforms as offered by Sharesight partner Six Park at higher levels (15%) than investors aged 60 and over (4%).
Millennial investors are strong adopters of mobile apps, with CommSec revealing over 50% of all trades made through their mobile app are by millennials. In addition among Sharesight users millennials are 39% more likely to track their investments on a mobile device.
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