Millennials help push ETF use to record levels, says BetaShares
Millennials and women are among the investor cohorts behind a record 20 per cent increase in the number of people in Australia pouring money into exchange-traded funds, says BetaShares.
Millennials and women are among the investor cohorts behind a record 20 per cent increase in the number of people in Australia pouring money into exchange-traded funds, says BetaShares.
The number of Australian investors using ETFs hit 385,000 in the 12 months ending December 2018, up from 314,000 the year before – a boost of 22 per cent.
This number is tipped to grow to more than 430,000 by the end of the year, according to the BetaShares/Investment Trends Annual ETF Report for 2018, released in Sydney on Wednesday. This surveyed 8,000 investors and 800 financial planners.
The percentage of millennials – people aged 22-37 – using ETFs has grown by almost 30 per cent, up from 19 per cent five years ago.
The popularity of ETFs among women has also increased, accounting for 29 per cent of all ETF investors in 2018, up from 19 per cent in 2013.
“The rate of ETF adoption in Australia is predicted to continue, with 116,000 ‘next wave’ investors planning to invest in ETFs in the next 12 months,” said BetaShares chief executive Alex Vynokur.
“Overall, our view is that Australia’s ETF industry is headed into another strong year for growth, and we could see the industry ending 2019 at $50 billion to $55 billion in assets under management.”
He also pointed to an increased focus on responsible investing via environmental, social governance principles, and a rise in the number of financial advisers recommending ETFs.
In addition to equity-based ETFs, their fixed-income counterparts also grew in 2018, hitting $1.3 billion in net flows, up from $1.1 billion in 2017. This asset class ranked third, behind international equities and Australian equities.
Vynokur said fixed income would grow in the next five to 10 years as investors were shunning cash because it offered inferior returns.
Key findings:
- The number of ETF investors in Australia reached a record high of 385,000 by October 2018, up more than 20 per cent for the year and surpassing earlier projections.
- The millennial cohort of ETF investors has grown to 29 per cent, from 19 per cent five years ago.
- The number of SMSF investors using ETFs has grown to 120,000 from 105,000 a year ago, though non-SMSF investor uptake is growing at almost double the rate.
- ETF popularity among financial advisers continues to increase, with the majority of Australian planners, 53 per cent, now recommending them, up from 45 per cent in 2017
Vynokur said investors continued to see ETFs as a cheap and easy means of portfolio diversification and access to international shares.
The following BetaShares ETFs carry a Morningstar Bronze rating:
QOZ FTSE RAFI Australia 200 ETF
Largest 200 Australian companies by economic size
QUS FTSE RAFI US1000 ETF
Largest 1000 US companies by economic size
AUST Managed Risk Australian Share Fund (managed fund)
At least 1,500 of the largest companies by market capitalisation on global exchanges and risk management strategy.
A200 BetaShares Australia 200 ETF
Provides exposure to the largest 200 companies listed on the ASX, based on their market capitalisation.