Year in review — Here’s how Stake members approached US markets in 2019
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Brokerage platform Stake has been busy in 2019, on-boarding local investors who are keen to look beyond Australian markets.
It’s one of the new competitors offering simple exposure to US stocks and ETFs with brokerage-free trades and mobile app functionality.
Looking back, it’s been an interesting year for investors with geo-political risks such as the US-China trade war continuing to lurk in the background.
Amid all that, global central banks embarked on another coordinated round of monetary policy easing which has seen interest rates in Australia fall to record lows.
On a macro level, when interest rates fall it’s usually good news for equities. And for the most part, global markets responded as the ASX200 posted a gain of around 20 per cent year-to-date.
In the US, returns have outperformed with the broader S&P500 up around 25 per cent while the tech-focused NASDAQ returned almost 30 per cent.
As a platform providing access to the US market, Stake has an interesting insight into how Aussie investors approach investing there.
And with 2019 almost in the books, its data team compiled some numbers on what trends stood out.
For starters, we took a look at the winners. These five stocks were highlighted by Stake members as their best-performing investments of the year.
– Tesla (TSLA)
– Apple (AAPL)
– Disney (DIS)
– Lululemon (LULU)
– Roku (ROKU)
Broadly speaking it was a mixture of big-name tech and entertainment & streaming services, while athletic apparel company Lululemon also made the top five.
Looking ahead, Tesla remains the subject of much debate among investors as it found a place in the top five stocks that are expected to outperform in 2020 — while also appearing on the “most-shorted” list.”
However, in a head-to-head question called “The Tesla Battle”, 77 per cent of respondents forecast more gains while only 23 per cent where in the short-seller camp.
By sector, Stake users are bullish about US stocks with exposure to renewable energy, but are less positive about oil prices, and they’re not convinced the cannabis bear market has finished running its course.
Across the board though, they are optimistic about the opportunities provided by US markets.
While the data showed around two thirds of Stake users also invest locally, almost three quarters (69 per cent) of those surveyed said they expected the S&P500 to outperform the ASX.
Gain more than 10 per cent — 24 per cent
Gain, but less than 10 per cent — 37 per cent
Relatively flat — 16 per cent
Fall less than — 10 per cent
“A crash is coming…” — 14 per cent.
Among the other interesting data points, over half (57 per cent) of respondents said they adopted more of a passive buy and hold strategy for US stocks, while just 12 per cent identified as full-time active investors and 30 per cent used a mixture of both strategies.
Members also offered their opinions on the rise of exchange traded funds (ETFs), the simple index-linked investment structures that give investors access to specific sectors or asset classes.
Total assets held in ETFs globally now stands at an all-time record high of around $US6 trillion ($8.8 trillion). But 69 per cent of Stake users don’t buy the “ETF Bubble” rhetoric, while only 31 per cent think the ETF party may be on its last legs.
Speaking with Stockhead, Stake’s global head of marketing Bryan Wilmot said the data showed investors weren’t just focused on high-risk opportunities in the US market.
“Even big names like Tesla and Lululemon have provided significant returns this year, and that attraction to more established companies has showed up across all of our customers — not just those looking at the smaller end of the spectrum,” he said.
“Younger investors have a reasonable risk appetite, but they see the US as less risky with more upside. And I think that’s mainly due to the liquidity and breadth of the market.”