‘Groundswell’ of ETF interest from younger investors
There has been a ‘groundswell’ in younger investors using exchange traded funds, according to BetaShares, with those under 40 accounting for two-thirds of new investors.
According to the BetaShares/Investment Trends ETF report 2020, the firm found first-time investors were mostly made up of investors under 40 who were using ETFs to achieve their financial goals as accessing growth exposure was their top priority. Other popular reasons included access to overseas markets, avoiding individual stock exposure risk and efficiency.
Younger investors were also more interested than older investors in socially-responsible ETFs with 28% of millennials expressing interest in these compared to 20% of overall investors.
BetaShares said it expected to see growth in ethical ETFs to outpace that of traditional ETFs with more products of this type to be launched to the market in coming years to meet demand.
The total number of investors using ETFs in Australia rose 58% from 455,000 to 720,000 in the 12 months to August 2020.
Alex Vynokur, chief executive of BetaShares, said: “The fact that investors, particularly younger investors, continued to invest in ETFs throughout 2020 suggests that not only are investors attracted to the liquidity ETFs offer in volatile markets, they also appreciate a simple, cost-effective way to diversify portfolios and minimise single stock risks.
“The COVID-19 pandemic has also brought social and governance considerations strongly into focus. We think this trend is likely to continue as the global economy emerges from the pandemic, and investors favour portfolios and companies whose practices align with their ethical values.”
The firm expected a further 190,000 people to use ETFs for the first time in the next 12 months and some 120,000 of these were forecast to be under 40.
AUTHOR
Laura Dew
Recommended for you
Index provider MSCI has unveiled two measures to make it easier for financial advisers and wealth managers to access transparent insights into private assets.
Vanguard has announced a strategic alliance with two US alternative asset managers to develop multi-asset solutions for financial advisers which combine public and private markets.
Clime Investment Management has enacted a range of growth initiatives to boost the firm’s reach with wholesale investors and a new approach targeting the retail market.
Generation Development Group, parent of Generation Life, has entered the ASX 200, having grown its funds under management to almost $4 billion.
