Australian investors seemed to have transitioned away from a local bias in 2019, Saxo Bank has said, as clients using its platform have flocked towards international technology giants and ETFs.
During the past year, the S&P 500 surged 29 per cent in US dollar terms, making for its best year since 2013.
Adam Smith, chief executive of Saxo Markets Australia commented: “Even though 2019 was characterised by high geopolitical uncertainty around the US-China trade war and Brexit, this did not drag on the long-term performance of global markets.
“Many who exercised patience between tweets and headlines throughout the year were very well rewarded.”
Australian companies topped the ranks for most traded stocks among Saxo clients, with Afterpay, Fortescue Metals Group, BHP and Zip Co at the head of the list. Microsoft was the fifth most traded single stock.
In ETFs, Vanguard ruled the roost: its Australian Shares Index ETF, US Total Market Shares Index ETF and FTSE Emerging Market Shares ETF were the most traded funds.
But in terms of most popular current holdings among Saxo clients, the top five stocks were all international technology providers, with none of them being listed in the local exchange.
The leading single stock was Apple, followed by Facebook, Microsoft, Amazon and Chinese force Alibaba Group.
Globally, Saxo added, some of the same stocks were also among the most traded ones for its clients during the year.
“Interestingly our Australian clients no longer seem to have a local bias when it comes to long-term stock holdings as they can see the opportunities that abound in international equity markets, particularly the US,” Mr Smith said.
“However, interest in local names does remain strong with ASX-listed stocks becoming more actively traded.”
He noted however that investors have acted differently with ETFs.
The top five ETFs held by Saxo clients were all Vanguard funds listed on the ASX – the number one ETF being Vanguard Australian Shares Index ETF.
However number two and three focused on overseas markets: Vanguard US Total Market Shares Index ETF and FTSE Emerging Markets Shares ETFs. The others were locally based.
“There’s a bit of crossover between the most traded ETFs and the most popular long-term holdings because there’s just a lot of buying in this space,” Mr Smith said.
“Australian investors have been bulking up their portfolios with broad-based ETFs, a trend that is likely to continue for many years still.”
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].