We’re delighted to introduce our new series “Ringing the Bell” with the ASX. Jessica Amir will be catching up with key figures from the ASX to bring you the latest investing trends, considerations and insights.
In the inaugural instalment of this series, Jessica caught up with the ASX’s General Manager of Investment Products, Andrew Campion, to unveil the major trends highlighted in the “ASX Australian Investor Study 2020.”
In this video, Andrew covers:
Jess: Welcome to Ringing of the Bell brought to you by the ASX and Bell Direct, I’m Jessica Amir from Bell Direct and joining us today is Andrew Campion, he’s the General Manager of Investment Products at the ASX, Andy thanks so much for having us.
Andrew: Great to see you jess and welcome to the ASX.
Jess: Well thank you for having us. So today we’re talking about the key themes that have emerged since COVID-19 discovered by the ASX Australian Investor study 2020 and I guess one of the key things is that there’s been a huge increase in investing since March 2020 when the market hit its COVID-19 low and investors are increasingly seeing volatility as an opportunity in fact 46% of investors are seeing volatility as an opportunity taking heat of the words of Warren Buffett perhaps.
Andrew: Yeah it has been a huge year for markets Jess but I think it just reinforces the fact that markets are constantly adapting and changing to reflect the changes in the broader economy so in some ways it’s no different that’s what’s always happened. ASX has been conducting these studies since the mid-1980s every two or three years and every single time something new and interesting emerges from each of those studies. For this year’s study we’re actually in the field surveying about 5000 individuals just before the onset of COVID-19 so our initial reaction was well it might it may invalidate a lot of our results but on reflection it actually provided us a great opportunity to go back into the market for a follow-up survey and use that to sort of compare and contrast the changes in investors behaviours and attitudes between those two dates between January and May of this year and what we found is that’s right investors have been really active since the onset of the pandemic. 54% of investors have made changes to their portfolio in that time, 28% of investors have actually are going to change their retirement plans even if they’re many decades away from retirements either feeling like they’ll need to rely more on social security or have less to live off in retirement and we also found that quite a lot of changes in how people hold their cash balances as interest rates have come down. 17% of investors actually invested all their spare cash whereas another 13% actually increased their cash holdings to reflect some of the nerves around about the volatility in the market.
Jess: And your survey found what we’re seeing at Bell Direct as well and that’s younger Aussies are now investing more than they ever have been before, so this is really quite interesting and great to see, so what are younger Aussies doing that you’ve found.
Andrew: Yeah that’s right there’s definitely been a big uptick in younger investors looking to start their investment journey, we found there’s around about 900,000 intending investors and by that we mean people who are looking to start investing for the first time over the next 12 months and out of that 900,000 about 250,000 are what we call next generation investors. So those are individuals between 18 and 24 years of age. A lot of that new investors new young investors coming to the market is driven by the realization that you need a lot less money to start investing on ASX and as previously the case our previous study in 2017 people thought you needed about $6,800 before you could start in investing in shares and other types of investments on ASX.
This year’s study found that dropped by about a third people now think it’s only around about $4,300 that you need, so it’s come down a long way and a lot of the driver of that is the rise of ETF’s, ETF’s provide a great way of starting out in investing. It’s easy to understand and it provides a lot of diversification and for smaller amounts of money and it’s really well suited to younger investors as well because it plays into the things that they care about, it’s easy to use ETF’s to invest in global technology companies and also to invest with an ethical viewpoint. We found about 19% of those next gen investors actually rely on ethical factors when they’re making their investment choices.
Jess: That’s really exciting really good to see but it’s not just the younger ones getting started it’s sisters I guess doing it for themselves as the song goes so female investing has definitely markedly increased and of those new investors about 45% of new investors are female, so that’s really exciting.
Andrew: Yeah that’s right and looking forward to the picture is even brighter, those intending investors we talked about 51% of those 900,000 are actually females so for the first time we’re actually seeing more females entering their investment journey for the first time. There’s still a lot of work to do here in in terms of female investors portfolios, they tend to hold fewer assets to be less diversified and also more risk adverse and on the information or the education side of things that they tend to be less aware of investment options and they’re also more conscious of barriers that might prevent them from developing their portfolio such as a fear of hidden costs but what’s encouraging is those sort of barriers are actually somewhat able to be overcome through more education including some of the initiatives that ASX runs. So what we found with female investors they’re actually a lot more open for to a wider source of information to enhance their knowledge of investing, we found about 25% percent of female investors use the ASX website or ASIC’s Moneysmart website and they’re also big fans of the Barefoot Investor.
Jess: Nice, so zooming out looking at ladies and men, your survey found that I guess investors want it all, as a song goes they want it all, so when it comes to investing they want to maximize their returns but also getting passive income from dividends or distributions, so tell us about that.
Andrew: Yeah that’s one of the key challenges to investing is striking that balance or those offsetting priorities between capital growth, investing for income and also protecting your initial capital outlay. So that’s at the heart of what we do with our education and initiatives. Diversification is the only free lunch in investing as they say and that’s really true and we do put at the heart of all our seminars and education materials that we have on our on our website. In terms of the study a key part of the study is to look at investors attitudes to risks and what is their investment priorities. So from January to May we found that investors in a broad sense increase their risk appetite they’re more willing to accept variability in in their portfolio value in the with the aim of higher investment returns, we found that next gen investors are much more focused on diversification impacts than other age cohorts and we also found that all age cohorts had a similar view on the importance of the sustainability of dividends right through from next-gen investors all the way through to retirees which is somewhat surprising because you’d think that young investors aren’t as focused on dividends as retirees but that was a somewhat interesting result.
Jess: So I guess they do want passive income so that they can go on holidays and do what they want. So let’s talk about the future now so over the next 12 months 57% of Aussies say that they tend to buy shares, 28% want to buy ETF’s and a smaller portion about 17% want to fork out some cash into international shares but what we find at Bell Direct is that clients do prefer to buy direct shares maybe when they’re starting out, we find that they tend to dabble in ETF’s and also when they’re you know going into international equities they buy ETF’s as well but what are you what are you finding.
Andrew: Yes the survey points towards the in for the next 12 months, investors preferences is very much geared towards domestic shares. Now I guess that sort of makes a lot of intuitive sense, our market is still, the ASX200 is still about 1,000 points below its pre-COVID-19 levels whereas some global markets like the U.S. are already back or even at all-time highs so I think some investors are seeing a lot more value in the domestic share market and there’s also probably a belief that by and large Australia is doing really relatively well on a global sense in terms of dealing with the economic impact of COVID-19. So we’re definitely seeing that and next-gen investors in particular over 80% of those are looking to buy more Australian shares in the next 12 months and one other interesting result looking forward for the next year or so is a lot of investors during this pandemic have realised there’s a lot of value through financial advice, there’s about 17% of people that are currently not using a financial advisor are looking to engage with some sort of professional financial advice over the next 12 months.
Jess: Well the ASX Australian Investor study has definitely highlighted a lot of impact since COVID-19. Investors behaviour has changed, has been a massive increase in younger Aussies investing, females investing, so there’s a lot of optimism and in fact we’re going to see a lot of increase in activity in investing over the next 12 months so it’s a very exciting time. Andy Campion from the ASX thank you so much for your insights.
Andrew: Thanks JessClose Transcript