These are the top brokers Aussies use to invest at home and overseas

With the ever-growing number of stockbrokers available to Australian investors, many investors are left wondering which is the best broker to suit their needs.

Not to mention that priorities differ depending on the individual investor; whether you’re a frequent trader or more of a long-term investor, or if you prefer stocks or ETFs.

Luckily, Sharesight has broken down the most popular brokers Aussies used to invest in FY21/22.

By user numbers, CMC Markets comes out on top, followed by CommSec, Selfwealth and Pearler.

Why are these brokers a popular choice?

While CommSec has the largest market share in terms of overall Australian investor numbers, CMC Markets managed to edge ahead among Sharesight’s Australian user base – likely due to its connection to the Sharesight API, which allows Sharesight users to directly link their CMC brokerage account to a Sharesight portfolio.

Plus, CMC’s support for a wide range of global markets – including $0 brokerage fees for international trades – is likely another reason it was the most popular choice for Australian investors.  

CommSec was also a clear favourite with its long history as a leading Australian broker, and one interesting insight is the presence of auto-investing broker Pearler, a platform that is built with long-term investors in mind. 

Notably, investors can easily sync their trades from all three platforms to a Sharesight portfolio. 

By trade numbers CommSec comes out on top

But when you look at the data in terms of the most popular broker by number of trades, CommSec is the clear winner, followed by CMC, despite CommSec having consistently higher brokerage fees across a range of trade types.

“One possible explanation for CommSec as the most popular broker among frequent traders is that CommSec offers an expansive range of research tools and free live pricing, plus access to key global markets including the NYSE, NASDAQ, LSE and TSE, which would appeal to frequent traders,” said Stephanie Stefanovic, spokesperson for Sharesight. 

“With comparatively lower brokerage fees for the ASX, $0 international trades and a range of technical analysis tools, it is also clear why CMC Markets is popular with frequent traders.”

Third in the list of most popular brokers by trade numbers is Selfwealth, with its relatively low-cost flat trading fee, and access to US and Hong Kong markets. 

Selfwealth the choice for ETF investors

Interestingly, Selfwealth comes out on top among ETF investors, followed by CommSec and CMC Markets, which could be due to the broker’s offer for free brokerage on ASX ETFs, a campaign which ran for two months during FY21/22. 

According to Selfwealth, ETFs are one of the most sought-after assets among its customers, with ETFs comprising up to 40% of the value of all holdings across the platform. 

Not to mention that ETFs have been steadily growing in popularity as a choice for Australian investors over the past few years, with ASX ETFs valued at $113.5 billion as of June 2021.

Australian investors’ most-traded ETFs of FY21/22 were led by Vanguard’s Australian Shares Index ETF (ASX:VAS), followed by Vanguard’s MSCI Index International Shares ETF (ASX:VGS) and Betashares’ NASDAQ 100 ETF (ASX:NDQ).

“VAS tracks the ASX 200, making it a good choice for investors looking to diversify and balance their portfolio while still focusing on Australian shares,” Stefanovic said.

“VGS also tends to be a popular ETF for Australian investors looking to diversify their portfolio, as it provides exposure to many of the world’s biggest companies listed in developed countries and is exposed to fluctuating values of foreign currencies. 

“At the same time, NDQ tends to be popular with investors seeking exposure to the US tech industry, as this ETF tracks the NASDAQ 100, which includes a diverse range of tech stocks, including some of the world’s largest companies by market capitalisation.” 

What about overseas trades? 

While a combination of economic and geopolitical events have caused markets to experience volatility worldwide, savvy Australian investors have looked outside the box and diversified into global markets.

For investors worldwide, US markets such as the New York Stock Exchange (NYSE), London Stock Exchange (LSE), Hong Kong Stock Exchange (HKEX) and Nasdaq are typically popular choices as they provide investors with access to some of the world’s highest-valued companies, along with a diverse range of industries and sectors. 

As you might expect, the US was by far the most popular choice for Australian investors using Sharesight, with over 17,000 investors trading in US markets during FY21/22, compared to just 650 investors investing in the UK. Canada and Hong Kong were also popular options.

According to Stefanovic, there’s a correlation between the most popular international markets and Australian expat numbers.

 “For example, as of 2021, the US, Hong Kong, Germany and New Zealand are all part of the top 20 most common countries for expats to Australia,” she said.

“Other potential explaining factors for Australian investors’ preferred investment markets include similar currency conversion rates between the Australian and Canadian dollar, as well as the tendency for investors to invest in markets where they understand the language.”

Popular Aussie brokers for international trades

CMC Markets came out on top again as Australian investors’ favourite broker for international trades. This was followed very closely by Stake, along with Selfwealth, with its support for the NYSE, NASDAQ, NYSE American, NYSE Arca and HKEX markets. 

Stefanovic says CMC’s popularity is probably due to its access to US, UK, Canadian and Japanese markets for $0 brokerage fees – and its connection to the Sharesight API which makes it effortless for investors to track their international trades along with the rest of their investments. 

CMC Markets is also in the lead when brokers with the capacity of US trading are excluded, followed by Saxo Markets and Interactive Brokers.

Most popular stocks are Tesla and Apple

No surprise that Sharesight userss’ most popular trade of FY21/22 was Tesla (NASDAQ: TSLA) – which corresponds to Sharesight20 data from the same period, showing that Tesla has consistently been one of investors’ most popular buy and sell trades.

This is likely due to the strong performance of Tesla’s share price over the past few years, with opportunistic investors taking advantage of a few rare dips in the stock’s price during FY21/22.

Similarly, Apple (NASDAQ: AAPL) was a popular investment for Sharesight users, not much of a surprise really considering the ongoing success of the iPhone and other Apple products, plus the company’s exponential share price growth over the past decade.

You can sign up to Sharesight if you’re looking to track the performance of your investments – including Australian and global stocks, ETFs and funds – all in one place. 

This article was developed in collaboration with Sharesight, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.