Women make up half of new investors but still face barriers, ASX 2023 study shows
An ASX study has found that more than half of those who have started investing in the past two years are female, despite the nation’s wage gap.
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Women and younger Aussies have helped lift the number of adult investors across the country to a record 10.2 million, according to the ASX Australian Investor Study 2023.
Retail trading value has returned to pre-Covid-19 levels, with the number of investors holding on-exchange investments continuing to steadily grow.
There are now more female investors than ever before, while young Australians (aged 18-24) make up more than one in five of those who began investing in the past two years.
The report said that while females made up more than half of the 1.2 million net new investors since 2020, women were still under-represented as a whole at 42 per cent versus 58 per cent.
More women than men cited affordability as their primary barrier to investing.
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In its report the ASX said this was to be expected given a significant wage gap, with Aussie women on average earning 25 per cent less than their male counterparts – $85,655 versus $107,466.
Of the Australians who have never invested, 64 per cent are female.
The survey found that female investors found the selection of information sources the most challenging aspect of investing, with more than a third turning to family and friends to guide their decisions.
Women were also less likely than men to turn to professional sources such as the ASX website, company annual reports and paid subscription investing websites.
However, in some good news the study found that 55 per cent of the next gen investors who had started trading in the past two years were female.
Young investors seek income stream
The study found the main investment goal for young investors was to build a sustainable income stream.
In fact they were twice as likely to be investing for income than retirees, despite most likely having a steady income from work.
Interestingly, the survey found that the younger cohort self-identified as being risk averse, preferring guaranteed and/or reliable returns.
However, in a juxtaposition, almost one in three held cryptocurrency and their portfolios were the least diversified of all age groups, suggesting there may be a gap in financial literacy.
“Covid created this wave of new retail investors and our own internal analysis saw record trading value from this cohort,” ASX general manager, investment products and strategy, Andrew Campion said.
He said younger investors were continuing to enter the market for the first time, making up almost 30 per cent of the 1.33 million non-investors that intended 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 said.
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Growth of ETFs
Campion said the latest study had found that the number of investors holding on-exchange investments had grown from 6.6 million to 7.7 million in 2023 – the highest proportion of on-exchange investors in more than a decade.
“While Australian shares are still the most popular of all on-exchange investments, exchange traded funds (ETFs) continue to grow in popularity with 20 per cent of investors holding such investments, up from 15 per cent three years ago,” he said.
The growth aligns with ASX’s latest statistics, which reveal that the total ETF funds under management (FuM) figure has grown by $80 billion – from $63.5 billion in May 2020 to $143.5 billion at the end of May 2023.
The report compared holdings of different asset classes and found there had been a 4 per cent dip in residential property investment but gains in shares and ETFs, suggesting Aussies were seeking other ways to build wealth outside of traditional property.
Portfolios increase despite cost-of-living pressures
The median portfolio size has risen from $130,000 in 2020 to $170,000 in 2023, despite increased cost-of-living pressures due to inflation and rising rent and mortgage servicing costs following interest rate rises.
The report found a factor in the increase in the median portfolio size was that, on average, investors’ total income is higher in 2023 than in 2020 – $96,000 compared to $90,000.
In addition, the post-pandemic bull run could have contributed to the larger average portfolio in 2023.
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Of all on-exchange investors 37 per cent had portfolios worth under $100,000, compared to 43 per cent of investors in 2020.
The proportion of investors with portfolios worth between $100k and $500K has risen, contributing to the growth in the median portfolio size overall.
Not surprisingly, the more experience the investor has, the larger their portfolio tends to be, with those who’ve been investing 10 years or more having a median portfolio of $850,000. That’s almost double those who’ve been investing for 5-10 years ($430,000).
Trading behaviours
Aussie shares remain the most popular investment to be traded in the past 12 months at 24 per cent, followed by ETFs at 11 per cent then cryptocurrency and residential property, both at 9 per cent.
Overall, the median annual number of share or listed investment trades made by on-exchange investors was 12, with a median value of $5500.
Investors monitored their investments more frequently on average in 2023 with 42 per cent checking at least weekly, up from 39 per cent in 2020.
Self managed superannuation fund (SMSF) investors were far more likely to trade shares than non-SMSF investors – 78 per cent v 51 per cent – while non-SMSF investors were more likely to trade non-residential investment property.
Popularity of online investors
The vast majority of investors, at 70 per cent, used online brokers to place trade orders.
This year the ASX investor study for the first time asked about micro-investing apps or robo-advisers as a method of trading.
It found only 6 per cent of investors used micro-investing apps, and 5 per cent used robo-advisers to trade. Just 15 per cent relied on their Adviser to place trades – slightly more than those who used a full-service broker, at 12 per cent.
The study notes said it remained to be seen whether the use of micro-investing apps and robo-advisers would grow as a method of trading – especially among next generation investors or investors with limited capital.
ESG ranks lowest of considerations
According to the report 31 per cent of investors based their investing decisions on environment, social and governance (ESG) considerations.
However, ESG was only a top-three priority for 6 per cent of investors surveyed and it ranked the lowest out of 15 categories above “other”.
- The highest considerations were:
- Investment return at 42 per cent
- Investment risk at 35 per cent
- Personal circumstances at 33 per cent
- Fees at 25 per cent.
Meanwhile, 14 per cent of investors invest in companies focused on creating a positive impact and 11 per cent actively avoid companies that create social and environmental harm, referred to in the report as the ESG conscious.
Next generation investors and accumulators are more likely to be ESG conscious, with engagement declining with age.
Among pre-retirees in particular, 34 per cent say ESG investment is conditional upon achieving comparable returns to other investments, while another 15 per cent say decision-making should not be based on ESG grounds.
Similar attitudes were seen among retirees.
Overall, 23 per cent of investors have not heard of responsible investing, with 28 per cent of next generation, the lowest awareness among all age cohorts, and 29 per cent of female investors being unaware.
However, slightly more females than males were ESG conscious – 32 per cent v 31 per cent.
Males were almost twice as likely, at 19 per cent, to believe investment decisions shouldn’t be made on ESG grounds than females, at 10 per cent.
Mirrors Stockspot research
Stockspot head of client care and advice Sarah King told Stockhead some of the ASX Australian Investor Study 2023 findings mirrored her company’s research and data.
Stockspot is online investment adviser which builds custom portfolios using ETFs.
“We’ve also recently seen an even split, for the first time, of female and male investors,” she said.
“Previously, it was skewed towards males.
“Of what women are investing in, we’re seeing that women are more risk-averse than men and take less risks.”
King said Stockspot was also seeing incredible growth in the rise of ETFs and the number of people trading in them.
This content first appeared on stockhead.com.au
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Originally published as Women make up half of new investors but still face barriers, ASX 2023 study shows