The ASX Investor Study
Deloitte/ Access Economics released their ASX Australian Investor Study this week, and it is absolutely full of interesting stats and ideas. The study aims to shed some light on investor behaviour, rather than determine if that they are doing is right or not. Lets dive in!
The Top 10 Findings:
The top 10 findings make for incredibly interesting reading. 3 points that stuck out to me straight away:
- 60% of Australian Adults or 11.2m people hold some sort of investment outside their superannuation fund
- Young people are increasingly investing outside of super. Over the last 5 years, the proportion of 18-25 year olds has doubled (10->20%) and the proportion of 25-34 year olds increased from 24 to 39%.
- 81% of investors under 35 are seeking guaranteed or stable investment returns!
Investment Ownership Trends:
While the level of ownership has remained constant over the previous 3 years, investing is becoming more common amongst young people. In particular, the proportion of 19-24 year olds investing has doubled, and is now up to 20%. Despite young investors being more digitally savvy, the use of robo advice in Australia is yet to really take off. Unfortunately however, young people seem to be somewhat scared of volatility, with over 80% of young investors preferring guaranteed or stable returns. This is exscatly the opposite of what should be happening – young investors should have the most tolerance for return variability!
Interestingly, nearly 8% of the adult population saw that they directly hold shares on an international exchange, which is higher than 3 years ago and much higher than I would have guessed.
Australians are risk averse:
By global standards, Australians are incredibly risk averse. Tellingly, just 29% of Australians would be willing to increase risk for the opportunity to earn more income, compared to 66% of ghlobal investors. As I stated previously, this risk aversion is particularly trong amongst young people. Access Economics speculates that this may be due to the fact that their formative years were dominated by the Global Financial Crisis.
The following chart might be the most interesting in the pack. I am extremely sceptical that this would represent reality in the case of a 20% fall. It is far more likely that investors would cut losses.
Around 60% of Australias use a form of professional advice. This is excellent! Although make sure you are informed yourself – after all, no one will care about your own investment results as much as you do.
I also though this section of the report was excellent. Deloitte/Access Economics breaks down investors into 3 different brackets, being next generation, wealth accumulators and retirees. Of particular interest in my opinion is how backwards the risk appetite seems to be.
Barriers to investing:
Further on, Deloitte tackles the barriers to investing highlighted by non-investors. As they say: “Encouragingly, a lack of interest was ranked very low on the list”.
With the cost of investing coming down every year, both the first and third answers are particularly interesting. I suspect the high incidence of “I don’t have enough money to invest” is a result of Australia’s love affair with property, which would make this answer more understandable.
We’ve tackled the rest of these answers on the blog – you can educate yourself (or find excellent financial advice), volatility provides opportunity and focusing on dividends makes for a smoother ride, and investing in dividends shares (and LICs in particular) means that you only need to worry about managing your ivnestments at tax time!
What are Australians Investing in?
Australian’s also aren’t very diversified compared to international peers. The reason for this is an aversion to bonds, primarily.
Look at all thos LIC investors! Music to my ears. Interesting also to see how close ETF’s have moved. I’m also surprised that so many people are traiding options and futures in Australia. We’ve also talked about hybrids before – the trading margin of these instruments has been falling over the previous 6 months, so investors in these notes have done reasonably well recently.
Overall, this study makes for incredibly interesting reading. For those of you that are interested, the source document can be found here.