More women than men cite affordability as their primary barrier to investing. Pic: Getty Images
Women make up half of new investors but still face barriers to investing, ASX 2023 study shows
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- ASX investor study 2023 shows number of investors in Australia has reached a record high
- While there are more women investors than ever they still remain under-represented
- Young Aussies make up more than one in five of those who started investing in last two years
Women and younger Aussies have helped lift the number of adult investors across the country to a record 10.2 million, according to the ASX Australian Investor Study 2023.
Retail trading value has returned to pre-Covid-19 levels with the number of investors holding on-exchange investments continuing to steadily grow.
There are now more female investors than ever before, while young Australians (aged 18-24) make up more than one in five of those who began investing in the last two years.
While females made up half of the 1.2 million net new investors since 2020, women are still under-represented as a whole at 42% versus 58%. More women than men are citing affordability as their primary barrier to investing.
In their report the ASX said this was expected given the significant wage gap, with Aussie women on average earning 25% less than their male counterparts – $85,655 versus $107,466.
Of the Australians who have never invested, 64% are female.
The survey found that female investors find the selection of information sources the most challenging aspect of investing, with over a third turning to family and friends to guide their decisions.
Women are also less likely than men to turn to professional sources such as the ASX website, company annual reports and paid subscription investing websites.
However, in some good news the study found that 55% of the next gen investors who began investing in the last two years were female.
Young investors seek income stream
The study found the main investment goal for young investors is to build a sustainable income stream. In fact they are twice as likely to be investing for income rather than retirees despite most likely having a steady income from work.
Interestingly, the survey found that the younger cohort self-identify as being risk averse, preferring guaranteed and/or reliable returns.
However, in a juxtaposition almost one in three hold cryptocurrency and their portfolios are the least diversified of all age groups, suggesting there may be a gap in financial literacy.
“Covid created this wave of new retail investors and our own internal analysis saw record trading value from this cohort,” ASX general manager, investment products and strategy, Andrew Campion said.
He said younger investors are continuing to enter the market for the first time, making up almost 30% of the 1.33 million non-investors that intend to invest in the next 12 months.
“It is important that as a financial community, we arm these new investors with the information that they need to make informed investment decisions,” he said.
Growth of ETFs
Campion said the latest study has found that the number of investors that hold on-exchange investments has grown from 6.6 million to 7.7 million in 2023 – the highest proportion of on-exchange investors in over a decade.
“While Australian shares are still the most popular of all on-exchange investments, exchange traded funds (ETFs) continue to grow in popularity with 20% of investors holding such investments, up from 15% three years ago,” he said.
The growth aligns with ASX’s latest statistics where total ETF funds under management (FuM) has grown by an $80 billion from $63.5 billion in May 2020 to $143.5 billion as at the end of May 2023.
The report compared holdings of different asset classes and found that there’s also been a 4% dip in residential property investment but gains in shares and ETFs, suggesting Aussies are seeking other ways to build wealth outside of traditional property.
Portfolio size increases despite cost of living pressures
The median portfolio size has risen from $130k in 2020 to $170k in 2023, despite increased cost of living pressures due to inflation along with rising rent and mortgage servicing costs following interest rate rises.
The report found a factor that may contribute to the increase in the median portfolio size is that, on average, investors’ total income is higher in 2023 than in 2020 – $96,000 compared to $90,000.
In addition, the post-pandemic bull run could have also contributed to the larger average portfolio in 2023.
Of all on-exchange investors 37% have portfolios worth under $100k, compared to 43% of investors in 2020.
The proportion of investors with portfolios worth between $100k and $500K has risen, contributing to the growth in the median portfolio size overall.
The more experience the investor has, the larger their portfolio tends to be with those who’ve been investing 10 years or more having a median portfolio of $850k. That’s almost double those who’ve been investing for 5-10 years at $430k.
Trading behaviours
Aussie shares remain the most popular investment to be traded in the last 12 months at 24%, followed by ETFs at 11% then cryptocurrency and residential property, both at 9%.
Overall, the median number of share or listed investment trades made by on-exchange investors was 12, with a median value of $5,500.
Investors monitored their investments more frequently on average in 2023 with 42% monitoring at least weekly than they did in 2020 where it was 39%.
Self managed superannuation fund (SMSF) investors were far more likely to trade shares than non-SMSF investors, with 78% vs 51%, while non-SMSF investors were more likely to trade non-residential investment property like commercial property.
Popularity of online investors
The vast majority of investors at 70% use online brokers to place trade orders.
This year the ASX investor study for the first time asked about micro-investing apps or robo-advisers as a method of trading.
It found only 6% of investors use micro-investing apps, and 5% use robo-advisers to trade. A small number at 15% rely on their adviser to place trades – slightly more than those who use a full-service broker at 12%.
The study notes said it remains to be seen whether the use of micro-investing apps and robo-advisers will grow as a method of trading – especially among next generation investors or investors with limited capital.
ESG ranks lowest of considerations for investors
According to the report 31% of investors based their investing decisions on environment, social and governance (ESG) considerations.
However, ESG was only a top-three priority for 6% of investors surveyed and it ranking the lowest out of 15 categories above ‘other’.
The highest considerations were investment return at 42%, investment risk at 35%, personal circumstances at 33% then fees at 25%.
Meanwhile, 14% of investors invest in companies focused on creating a positive impact and 11% actively avoid companies that create social and environmental harm, referred to in the report as the ESG conscious.
Next generation investors and accumulators are more likely to be ESG conscious, with engagement declining with age. Among pre-retirees in particular, a larger proportion at 34% say ESG investment is conditional upon achieving comparable returns to other investments 34%, while another 15% say decision-making should not be based on ESG grounds.
Similar attitudes were seen among retirees.
Overall, 23% of investors have not heard of responsible investing, with 28% of next generation, the lowest awareness among all age cohorts, and 29% of female investors being unaware. However, slightly more females than males are ESG conscious – 32% vs 31%.
Males are almost twice as likely at 19% to believe investment decisions shouldn’t be made on ESG grounds than females at 10%.
Mirrors Stockspot research
Stockspot head of client care and advice Sarah King told Stockhead some of the ASX Australian Investor Study 2023 findings mirror their research and data.
Stockspot is online investment advisor which builds custom portfolios using ETFs.
“We’ve also recently seen an even split, for the first time, of female and male investors,” she said.
“Previously, it was skewed towards males.
“Of what women are investing in, we’re seeing that women are more risk-averse than men and take less risks.”
King said Stockspot was also seeing incredible growth in the rise of ETFs and the number of people trading in ETFs.
