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16/08/2017

ASX study digs deep on investment trendsby Michael Yiannakis

Vintage Investing by ccPixs.com - (CC BY 2.0)
Just as it pays to visit your doctor for an annual medical checkup, for those of us working in or with financial services firms it’s good to regularly take a close look at the trends impacting investment markets to assess how the sector is tracking and what themes are developing.

One group taking the pulse of Australian investors is Deloitte Access Economics with its ASX-commissioned Australian Investor Study. For the 2017 study, Deloitte surveyed 4,000 investors to gain insights into Australia’s investment landscape covering perceptions, attitudes, behaviours and demographics.

The report digs deep on trends around the ownership of investments, trading behaviours, risk profiles and the overall attitude of Australian investors.

Through compulsory superannuation, the bulk of working Australians are investors. However, when it comes to direct investment decisions, they are not all as engaged as they could be.

Still, Australians rely heavily on investment is an important source of income. The Australian Bureau of Statistics says that among median households, about 20 per cent of weekly income comes from investments. Not only does it allow people to diversify their sources of income, but it allows them to manage financial risk, grow their wealth and plan for retirement. 

One finding worth highlighting is the popularity of self-managed superannuation funds (SMSFs). Driven by an investment goal of saving for retirement, the report found that almost one-third of investors that do not currently use an SMSF intend to establish one in the future.

The latest ASX Australian Investor Study 2017 discusses trends and their impact on the investment landscape, as well as including more comprehensive questions about risk attitudes, familiarity with a larger range of on-exchange investments, use of diversification among investors, and views of new technologies.

Here are our top 10 take-outs from the ASX Australia Investor Study:
  1. Investor profile: Many Australian adults are comfortable investing, with 60% of them directly holding investments (including those not available on a financial exchange) outside of their institutional superannuation fund. 

  2. Investment ownership trends: The level of ownership of ‘on-exchange investments’ (for example, shares and derivatives) has remained relatively stable in the past three years around 37%.

  3. Lack of diversification: Australians are primarily invested in cash, shares and investment property. This only includes investors’ holdings outside their superannuation fund, and they could be more diversified depending on how their super is structured. 

  4. The rise of SMSFs: The popularity of self-managed superannuation funds (SMSFs) continues to grow with 30% of investors that do not currently use an SMSF planning to establish one in the future. SMSFs are mostly exposed to cash, shares and property. 

  5. Cash remains popular:  More investors are planning to move out of cash than other investments over the next 12 months. This is mostly likely because of low interest rates, but cash is expected to remain as one of the most popular asset classes.

  6. On-exchange investments widely held: The survey found 62% of all investors  hold on-exchange investments in varying forms. Cash savings come next (56%) followed by investment property (37%).

  7. Australians are risk averse: Nearly 70% of all Australian investors are seeking stable, reliable or guaranteed returns. A separate report from Legg Mason in 2015 reported that only 29% of Australian investors were prepared to take on more risk to generate higher income compared with 66% of global investors. 

  8. Insufficient understanding of diversification: Around 40% of all investors say they do not have a diversified portfolio. While some may choose to have more targeted portfolios, others may be hamstrung by limited access or understanding of products.

  9. Seeking advice: About 60% of all investors seek professional advice (a financial planner, full-service stockbroker, accountant or lawyer). Typically, high-income earners seek financial advice, although the differences are slight. 

  10. Research preferences: Australian investors are typically self-directed and do their  own research. Many also take guidance from family and friends. 

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