According to the ASX Australian Investor Study released last week, 10.2 million Australians are now investing outside of their primary residence and super, with more female investors than ever before.
Promisingly, the study found that 55 per cent of the next-generation investors (aged 18–24) who began investing in the last two years were female.
While women made up half of the 1.2 million net new investors since 2020, they are still under-represented as a whole (42 per cent versus 58 per cent), with more women than men citing affordability as their primary barrier to investing, the findings revealed.
According to the market operator, this was to be expected given the significant wage gap, with Australian women on average earning 25 per cent less than their male counterparts, and with women contributing to 64 per cent of the Australians who have never invested.
Female investors additionally found the selection of information sources the most challenging aspect of investing, with over a third turning to family and friends to guide their decisions.
As such, ASX said they are less likely than men to turn to professional sources such as the ASX website and company annual reports.
Moreover, male investors continue to have larger portfolios on average — $667,000 compared with $413,000 for women, with 31 per cent of female investors having balances below $50,000 compared with 21 per cent of male investors.
“Drivers behind investment inequality are complex. One contributing factor may be the difference in income levels,” the market operator said in its report.
“An asset gap is potentially also created by the number and types of investments held by women. While women invest across all investment products, they don’t hold the same level of investments as men do. On average, women hold two types of investment products, compared to men who hold three.”
Next generation leads the charge
ASX also found that young Australians are continuing to play a key role in the investment landscape, with investors aged between 18 and 24 making up more than one-fifth (22 per cent) of those who began investing in the last two years.
Moreover, the main goal for young investors was seated in building a sustainable income stream, which the market operator deemed surprising given younger investors will typically have a steady income stream from work.
Interestingly, the survey found that this cohort will self-identify as being risk averse, preferring guaranteed or reliable returns, while almost one in three hold cryptocurrency and their portfolios were the least diversified of all age groups, suggesting there may be a gap in financial literacy.
Commenting on the findings, ASX general manager, investment products and strategy, Andrew Campion, said: “COVID created this wave of new retail investors and our own internal analysis saw record trading value from this cohort.”
“While retail trading value has returned to ‘pre-COVID’ levels, the number of investors holding on-exchange investments continues to steadily grow.”
Mr Campion said Australia will continue to see younger investors enter the market for the first time, alongside projections that this cohort will make up almost 30 per cent 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 concluded.
On-exchange investments see steady growth
The study also 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 and equating to 38 per cent of Australian adults.
While Australian shares are still the most popular of all on-exchange investments, exchange traded funds (ETFs) continued to grow in popularity with 20 per cent of investors holding such investments, up from 15 per cent three years ago.
“This growth aligns with ASX’s latest statistics where total ETF funds under management has grown by an astonishing $80 billion from $63.5 billion in May 2020 to $143.5 billion as at the end of May 2023,” Mr Campion added.
The report also compared holdings of different asset classes and found that there’s been a slight dip in residential property investment (down 4 per cent), but gains in shares and ETFs, suggesting Australians are looking at other ways to build wealth outside of property.