A new survey has found around one-third (31 per cent) of consumers have actively invested as a direct consequence of the COVID crisis, in a bid to capitalise on the continued market volatility.
The finding has come from a white paper by global funds network Calastone, which has researched how investors have responded to the COVID crisis.
Australian consumers are the most worried about their financial futures due to COVID, with the research showing 72 per cent are concerned, in contrast to the global average of 65 per cent.
While less than half (44 per cent) of Australians identified as proactive investors, below the global average of 55 per cent, those who did ranked highly against international peers in satisfaction.
The majority (72 per cent) of Australian proactive investors said they were satisfied with performance, on par with US investors. Aussies were also relatively satisfied with fees, second to the US.
Around half (48 per cent) are invested in active funds, while 45 per cent are in passive funds. A third (33 per cent) bought investments directly from a fund manager.
Consistent with their global peers, Australians’ top three reasons for investing were to grow capital long-term, earn higher returns than any savings accounts and diversify money management.
While Australians have lagged when it comes to micro-investing, 69 per cent said they would be more likely to invest if they could do so in smaller amounts (compared to 77 per cent, on average globally).
But only one-third of proactive investors agreed, with most citing the ability to invest in low-risk investments to be the top factor to encourage investing, followed by access and visibility.
Transparency of firms’ investment strategies was voted the most important factor for proactive investors, with investment in ethical funds being the least important.
Ross Fox, managing director and head of Australia and New Zealand at Calastone, noted gaps in confidence, understanding and transparency are holding back investors with capital to allocate.
“In today’s more self-directed market, Australians want transactional, user friendly, accessible, low cost and more transparent ways to engage as investors,” Mr Fox said.
“Investment managers who can innovate, adapt and address these needs and concerns, at every point of the investment journey, will be those who can tap large pools of uninvested capital.
“Integrating technology in how products are accessed, monitored and transacted will be key to increasing proactive investment behaviour and remaining competitive as new, technology-enabled insurgents come to market.”
Despite two years having passed since the royal commission, some respondents reported a negative view of the financial sector, although it was a minority, at less than 20 per cent.
They cited lack of trust, high fees and lack of transparency as the key reasons, with their opinions being affected by media, more than any other information source.
Lack of understanding also played a role in participation. Little more than a third (36 per cent) of Australians said they had a good understanding of investing.
But Australian investors bucked the global trend of caution against being able to buy financial products and services from supermarkets (43 per cent), should they become alternative providers of investment services. More international respondents leaned towards buying from large technology providers instead.
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].
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