‘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
Some 42 per cent of CEOs say they are actively reinventing their business to stay relevant in the next decade, with consumer services the most common choice for asset and wealth managers.
Former Ophir Asset Management chief executive, George Chirakis, has joined private equity manager Scarcity Partners, while the asset manager has appointed a replacement from Macquarie.
Australian Unity has appointed a fund manager for its Healthcare Property Trust, joining from Centuria Healthcare, as it restructures the product with a series of senior appointments.
Financial advisers nervous about the liquidity of private markets funds for their retail clients are the target of fund managers launching semi-liquid products which offer greater flexibility and redemptions.
