Specialist researcher Investment Trends has released its 2020 1H Online Investing Report, an in-depth study of the preferences and behaviours of online equities and ETF investors in Australia.
It was revealed that the population of active retail online investors in Australia surpassed one million for the first time with a record inflow of 265,000 first-time investors over the last year.
Between December 2019 and June 2020, the number of active online investors grew by 41 per cent from 750,000 to 1.06 million
“Australia is now home to over one million active online investors who have traded listed investment in the past year, driven largely by a record inflow of 265,000 first-time investors,” said Recep Peker, research director at Investment Trends.
“First-time investors typically consist of young Australians in the Zoomer or Millennial age group, but the pandemic-induced lockdown has accelerated these trends. This year, the vast majority of first-time investors are under the age of 40 (70 per cent), which represents a significant shift from last year (51 per cent),” added Mr Peker.
Mr Peker said that many first-time investors were attracted by buying opportunities presented by the market sell-off earlier this year, while the ability to start investing with small amounts “was also a catalyst for many.
“There is now great responsibility on online brokers, product manufacturers and thought leaders to help investors navigate this uncertain investing climate,” Mr Peker said.
Investors are now also demanding more features and services from their online brokers.
An increasingly competitive landscape has given online investors a greater choice of brokers and cheaper brokerage (or zero brokerage in some cases) according to the report.
Most Australian online investors are also prepared to pay their main broker to access more features and services.
“Low cost remains a strong driver for selecting an online broker, but the quality of service and support also matter,” Mr Peker said.
“Industry wide, 63 per cent of online investors are willing to pay their main broker for additional features, highlighting their demand for greater support. As the top of their wish list are stock research or more advanced analysis, tax tools and live pricing.”
Furthermore, the report revealed that ESG factors will matter more in investment selection.
A significant proportion of online investors are applying responsible investing principles to their investment decisions, by considering the impact of ethical, environmental, social and corporate governance (ESG) factors when selecting investments.
Specifically, the report found a quarter of investors said they had bought or sold investments based on environmental impact. Many have taken action by considering ethical and corporate governance factors, while 9 per cent took social issues into account.
“There is a strong appetite for investments that demonstrate good ESG standards, and the desire for investors to align their investments to their values, goals and aspirations is notable across all age segments,” Mr Peker stated.
For the first time, CommSec Pocket clinched first place across the main online brokers in overall satisfaction with 57 per cent of clients rating it as “very good” overall, followed by Stake (47 per cent) and SelfWealth (40 per cent) in the top three.