Aussies under the age of 40 accounted for around two thirds of new ETF investors in 2020, new research found.
The BetaShares Investment Trends ETF report found millennial investors are a growing cohort in Australia.
According to BetaShares CEO Alex Vynokur, first time investors are increasingly made up of those under 40 years old.
Vynokur said this is now a long-term trend and demonstrates a flip from the early adopters of ETFs, which were mostly wealthier SMSF investors.
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Vynokur said the fact that millennials have remained steadfast in their ETF investments throughout the volatility last year is a positive sign.
“Investing can be daunting, particularly in times of volatility, such as during the pandemic related market turmoil or more recently, during the GameStop controversy,” he said.
“The fact that investors, particularly younger investors, continued to invest in ETFs throughout 2020 suggests that not only are investors attracted to the liquidity ETFs offer in volatile markets, they also appreciate a simple, cost-effective way to diversify portfolios and minimise single stock risks.”
Aussie equities and ESG take focus
Investors reignited their home bias during 2020, with Australian equities taking the lion’s share of investor inflows (34 per cent) throughout the year.
The top three investments that ETF investors sought during COVID-19 included high growth ETFs, sector specific ETFs, and global equities.
The report found that socially responsible products were also in high demand, particularly among younger investors, with over one quarter (28 per cent) of millennials requesting more socially responsible investment products, compared to 20 per cent of all current ETF investors.
“The increased interest in socially responsible investing coincides with widespread and growing concern around the environment and global warming,” Vynokur said.
“The COVID-19 pandemic has also brought social and governance considerations strongly into focus. We think this trend is likely to continue as the global economy emerges from the pandemic, and investors favour portfolios and companies whose practices align with their ethical values.”
Vynokur said the research shows that are more millennials start investing, the more they are drawn to socially responsible options.
“We believe ethical ETFs will continue to outpace the growth of traditional ETFs and more ethical products will be launched in 2021 to tap into that demand,” Vynokur said.