The face of investing in Australia is changing – and so are the businesses we’re investing in.
If you’re reading this, chances are you’re one of the six-million-plus Australians who directly own shares (outside of super and property), or you’re about to join them.
So far, 2021 has provided opportune conditions for Aussie investors: the interest rates have remained low, business confidence is back at a high, and the Australian sharemarket has bounced back to record highs after last year’s COVID-19 economic downturn.
While we don’t have a crystal ball that predicts the future, we do know that certain investing trends are on the rise. We asked John Winters, co-founder of online trading platform Superhero, to help us unpack four of the most prominent trends:
1. Millennials, Gen Z and women are leading the charge
With the ability to access the sharemarket from a smartphone and small amounts of money, there’s a new generation of Aussie investors claiming their piece of the sharemarket pie.
According to the ASX Australian Investor Study 2020, close to a quarter of all Australian investors started investing in the past two years – with a significant rise in investors aged 25 or younger (hello, Gen Z). The study also found that women are now making up 45 per cent of all new investors, up from 31 per cent among those who started five to 10 years ago.
Winters has seen this trend play out on Superhero, which launched in September 2020 and has had 60,000 Australian sign-ups. On Superhero, millennials (aged 24 to 40) are the fastest growing demographic.
“It’s fascinating to see the rise of millennials, and particularly women, in investment markets,” says Winters. “This is a generation that was previously locked out of investing. It’s very cost-effective now – you can start with very low amounts of money. People have much faster and easier access to information, which is a huge change from what we saw with our parents and grandparents.”
Technology is a major factor, but so are the shrinking commissions and trading fees that allow more and more people to enter the market. At $5 a trade, Superhero is the cheapest flat fee platform in Australia, with no monthly fees and a minimum investment of $100. In comparison, some better-known platforms charge $19.95 per trade, with a minimum investment of $500.
Either way, it’s a lot cheaper than going to a traditional broker.
2. ETFs are all the rage
New investors are gravitating towards ETFs, which are a low-cost and low-maintenance way to dip your toes into the sharemarket and diversify your portfolio.
“A lot of younger people don’t know where to start,” Winters explains. “So taking that first step, they’re getting broad exposure, and a lot of them are buying and holding onto them for the long term.”
ETFs are baskets of shares or assets that deliver a similar return to a single ASX-listed (Australian Stock Exchange) index or commodity. According to the ABC, more than 1.3 million Australians have put their money into ETFs (exchange traded funds) – doubling since 2019.
They’re popular because they help solve the “decision paralysis” investors feel looking at a list of stocks and trying to pick a winner, Winters explains. And on Superhero, ETFs are free to buy and $5 to sell.
“There are so many ETFs on offer, and you need to do some research into what the underlying holdings are. But you would be able to find an ETF that fits your goals,” Winters tells us. “On Superhero we’ve taken 2500 shares and ETFs and categorised them into simple, easy-to-understand categories. One is ‘I Love Gold’ – a whole bunch of Australian gold miners. There’s also ‘US Tech Giants’ and ‘Cashless Society’, and we continue to expand those categories.
“It’s like how Netflix has categories. If you wanted to watch Action/Adventure movies, you would get all the relevant movies. We’ve done the same thing with the stock market.”
Watch: Superhero’s John Winters and Burman Invest’s Julia Lee join Kochie for the latest investing updates on Your Money & Your Life:
3. Sustainable businesses for the win
It’s not just about returns nowadays. Investors want to see businesses taking responsibility for the world we’re creating for the future, which is why sustainable investing is taking off.
“Sustainable investing” refers to Environmental, Social and Governance (ESG) – the values that should permeate a company’s entire business model. These can include environmental impact, social outcomes, transparency in governance, supply chain processes, commitment to diversity and other ethical concerns.
“What we see is often people are investing in what they’re invested in,” Winters says. “I’ve had conversations with people who’d say I’d rather get a seven per cent annum return knowing I’m in a sustainable investment, than get a nine per cent return if it’s going to pollute the environment.”
It’s not just about investing in businesses that plant trees. Big tech stocks like Apple, Microsoft and Adobe rank highly in sustainable and ethical investing.
“They have a strong focus on removing their carbon footprint from the world,” Winters adds. “They’re very focused on how they treat shareholders, their employees and how they treat the environment.”
Since most of us don’t have time to do all the checks and balances on a business’ ethical credentials, certain ETFs do the job for you.
BetaShares, one of the ETF providers on Superhero, has a Global Sustainability Leaders ETF (ASX: ETHI) that only features global companies that meet the strictest sustainability and ethical standards. You can buy or sell these units like you’d buy or sell any share on the ASX.
4. Shop local, buy global
Just 15 per cent of Australian shareholders own international shares, according to the ASX Investor Study 2020. However, that statistic may grow as the international market becomes increasingly more accessible to investors looking to emerging economies or growth markets of the world.
“As we go forward, the accessibility to investments is what is really going to change and open up,” Winters suggests. “So it doesn’t matter if you’re in Australia, you’ll be able to invest globally from here as seamlessly as you can invest in Aussie shares – that is what is going to be the big game-changer in the investment market.”
The current Superhero online trading platform is focused on the ASX, however, international trading is on the cards. In the meantime, ETFs provide investors a way to access international shares through the ASX.
“I think there’s going to be a continued strong rise in ETFs,” Winters adds. “If you take COVID as an example, people want exposure to the healthcare response from COVID. So you can invest in global healthcare ETFs, which gives you exposure to vaccine companies, medical device companies and more.”
No matter what, where or how you choose to invest, there’s one principle that will always be on trend: Do your research first. If you have questions, speak to a financial advisor.
To get started with investing or move your portfolio into one place, check out Superhero to see if it’s right for you. It’s free to join and offers detailed investment tracking, reporting and real-time data for all your investments.
This content is brought to you by Your Money and Your Life in partnership with Superhero.
The information above is intended to be general in nature and is not personal financial product advice. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. You should seek independent financial advice prior to making an investment decision in relation to a financial product (including a decision about whether to acquire or continue to hold). Pinstripe Media and Superhero are not liable for any loss incurred by use of or reliance on the information.