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Exchange Traded Funds investor numbers increase in Australia

Exchange Traded Funds investor numbers increase in Australia

Demand for diversification, low costs, and access to overseas markets drove exchange traded funds investor numbers in Australia up by 18% over a year, according to a new report released today.

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.

 

 

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Any securities or prices used in the examples given, including but not limited to Exchange Traded Funds, are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance. The commentary provided from external companies that are not a member of the Commonwealth Bank of Australia Group of Companies (the CBA Group) does not represent an endorsement, recommendation, guarantee or advice in regard to any matter. The CBA Group does not accept any liability for losses or damage arising from any reliance on external companies and their products, services and material.