Millennials and females driving ETF growth
Exchange traded fund (ETF) investors are expected to approach gender parity in the next five years as the number of female investors steadily grows.
According to a demographics report by State Street, which launched the first two ETFs on the Australian Securities Exchange (ASX) 20 years ago this month, one in four ETF investors were female now.
This compared to just one in 10 in 2001 and State Street said women could be close to achieving gender parity for ETF adoption in the next five years.
“Young women are the fastest growing cohort of ETF investors in Australia, showing that the gender investment gap may be closing,” it said.
“The trend is gathering pace, thanks to lower barriers to entry. It has never been easier for anyone to invest in an ETF.”
This echoed wider research by the ASX in March which found women had comprised 45% of total new investors in the past year which had accelerated due to the COVID-19 pandemic.
ETF investors had an average of $170,000 invested, the third-most popular behind Australian shares and investment properties.
The impact of the pandemic transcended gender as 47% of new ETF investors were millennials compared to 24% in 2001. The proportion of Gen X investors had fallen from 45% in 2001 to 23% in 2021.
However, baby boomers had maintained an aversion to the vehicles with the proportion of ETF investors being largely unchanged over the 20-year period, rising only a small amount from 24% to 25%.
State Street head of SPDR ETF Asia Pacific distribution, Meaghan Victor, said: “Better financial education and improvements in technology have helped make ETFs more accessible to younger Australians. Millennials are the ETF generation of the 2020s.
“The Australian ETP [exchange traded product] market is now five times larger than it was just five years ago, with more than $116 billion in assets under management (AUM) and more than 200 ETPs for investors to choose from.
“Even if the compound annual growth rate slows to a more comparable rate of 25%, like we have seen in Europe and the US, Australian ETP assets are still expected to grow from more than $110 billion to $226 billion in the next three years.”
When it came to returns from the first two ETFs, the SSgA S&P ASX 200 returned 413% while the SSgA S&P ASX 50 returned 384%, since inception to 25 August, 2021.
This compared to returns by the Australian Core Strategies (ACS) Australian equity sector of 379%.
Over the short-term, the ASX 200 fund had returned 26.1% while the ASX 50 fund had returned 25.5% compared to sector returns of 26.8% over one year to 25 August.
AUTHOR
Laura Dew
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