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Markets are volatile so what are investors buying (and selling)?

·3-min read
Money and investing dashboard
Most Aussies are sticking to their long-term investment strategies despite the volatility in financial markets. (Source: Getty)

Soaring inflation, interest rate hikes, supply chain issues and geopolitical turmoil may be driving stock market sell-offs around the world but few Aussie retail investors are panicking.

Brendan Doggett, Sharesies Australia country manager, said he was seeing very little panic selling on the micro-investing platform.

He chalked this up to how well-informed retail investors had become over the years.

“So people are still kind of sticking to their long-term strategies,” Doggett said.

In this period of volatility, he said investors were looking close to home and putting money into familiar companies.

Trading activity on the Sharesies platform in June

Top buys for June
Top buys for June

People were also gearing up for sales.

Doggett said trading activity had tapered off over the past few weeks despite deposits on the platform increasing significantly.

“So, it feels like people are kind of getting ready,” he said.

“They've seen what's happening, and are thinking potentially that we've reached near the bottom and they are ready to start investing again.”

He said people were looking to snap up bargains. He said banks, such as Westpac, had been on investors’ watch lists.

Mining companies have also been top buys, and Qantas had appeared in the top 10 buys.

Doggett said this was likely due to the “revenge travel” trend of people returning to the skies in their droves after being unable to travel during COVID.

The platform was also seeing more activity in exchange-traded funds (ETFs), which indicated investors were looking to diversify their holdings.

“ETFs have been so popular over the last couple of years, and we have seen even more activity going into ETFs when the market is falling or going sideways,” Doggett said.  

etfs
Source: Sharesies

The top three ETFs to buy were all Vanguard: Vanguard Australian Shares Index, Vanguard S&P 500 ETF and Vanguard MSCI Index International Shares.

“So, if you invest in all three, you’ve pretty much diversified your investments globally,” Doggett said.

While the niche-sector ETFs didn’t always see as much volume in trading, Doggett said the sustainability and climate ETFs were becoming increasingly attractive.

Doggett said the change of government meant clean energy and other sustainable industries were likely to see more support, which was attracting investment dollars.

Aussie retail investors staying firm

Recent data from eToro revealed only 7 per cent of Australian retail investors had sold investments during recent stock market sell-offs.

As many as 92 per cent had held onto their investments or were buying the dip, according to the survey of 10,000 global retail investors across 14 countries.

Around 64 per cent of the 1,000 Aussie investors surveyed held firm with their positions and another 28 per cent had bought the dip.

“Despite a barrage of setbacks across global financial markets, retail investors in Australia and around the globe have found the strength to look past the short-term volatility and use these drops in prices to bolster their portfolios for the long term,” Ben Laidler, eToro’s global market strategist, said.

“With bull markets ultimately built on the shoulders of bear markets and near four times the length and magnitude, staying the course and repositioning their portfolios should serve these investors well.”

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