Investor numbers in the Australian exchange traded funds (ETF) market reached 314,000 in September 2017, up from 265,000 the year before, the BetaShares/Investment Trends Annual ETF Report 20171 showed.
“We are seeing diversification, low cost, and access to overseas markets are the three top drivers for investing in ETFs among SMSF and individual investors,” the report said. “In addition, investors cite liquidity and convenience as other key reasons for choosing ETFs as an investment vehicle.”
BetaShares predicts the Australian ETF market will reach $40bn-$45bn in funds under management in 2018, growing by at least 30% year-on-year.
Investor age falling
The average age of those who started investing in ETFs in the 12-month period was 42, significantly younger than an average age of 56 among those who started investing in ETFs more than five years ago, the report found.
“The ETF industry has continued to grow and mature in Australia, and this year we are seeing evidence of a marked change in the type and age of investors as it becomes more mainstream,” BetaShares chief executive Alex Vynokur said in a statement released with the report.
“The combination of the historically low interest rate environment in Australia and low levels of affordability for residential housing is causing millennial investors to think in new ways about investment and wealth creation.
“Low cost, small minimum investment size, diversification and convenience are the key factors behind the popularity of ETFs in that market segment,” he said.
1. The ETF Report is the leading quantitative research study of Australian ETF investors. Based on responses of around 6,000 investors and 500 financial advisers, the study contains insights into the size and growth of the ETF industry and looks into the investment behaviour of retail investors, SMSFs and financial planners.