Increased demand for exchange traded funds saw the number of ETF investors in Australia surge to over 1.7 million during the past year, a rise of 33 per cent.
Strong ETF growth is expected to continue, according to research from Investment Trends, as a further 275,000 Aussies plan to make an ETF investment in the year ahead.
The research also revealed that 27 per cent of investors now use ETFs in core portfolio allocation, up from 16 per cent in 2020 and only 4 per cent in 2019.
Irene Guiamatsia, head of research at Investment Trends, said that ETF adoption had reached new highs for retail investors.
“Whether judicious or otherwise, retail investors tacitly associate passive investing with a cautious approach. The (ongoing) market turbulence certainly appears to have propelled a product that already had strong wind in its sails,” she said.
Notably, the research found that new entrants to the market were younger and more likely to be female on average, with females aged between 18 and 34 making up 21 per cent of all new investors in ETFs.
“Young women are on a mission to close the gender investing gap and determined to take charge of their financial future,” commented Ms Guiamatsia.
“They are eager to grow their knowledge and skills, highlighting education opportunities for issuers, financial advisers and investing platforms.”
Investors were also found to be more receptive to invest in ETFs with a thematic lens such as renewable energy and artificial intelligence compared to the traditional asset-class based approach like global equities.
Ms Guiamatsia said, “2021 was a significant inflection point that saw the concepts of ‘doing good’ and ‘doing well’ finally coalesce in investors’ minds, with ETFs seen as the vehicle of choice providing ease of access.”
