Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Boomers go blue chip and Gen X bets on energy transition in EOFY trading
A recent report breaking down end-of-financial-year trading by investors with million-dollar-plus portfolios shows a generational divide between Baby Boomers, who prefer prominent, blue-chip ASX stocks, and younger investors who are more focussed on players in the renewable energy transition.
Analysing data from its trading community of more than 129,000 members, trading platform Selfwealth found different generational cohorts of established investors demonstrated strong preferences for different investment strategies and products, with Baby Boomers favouring income-producing sectors like mining and banking and mostly buying blue-chip stocks.
“Fortescue Metals Group was the most bought stock among this cohort, outranking the next-best-placed stock, CSL, by a factor of nearly four to one,” Robert Marfell, Selfwealth’s brand and content lead, said in the report. “Interest in CSL was greater earlier in the year, prior to a sharp June sell-off in response to a guidance downgrade.”
Baby Boomers also showed interest in BHP in June following a rally in the price of iron ore, the report said.
“The generational divide isn’t as reflective of preferences in stocks, but rather preferences for stocks,” Marfell told The Inside Investor.
“Older generations who grew up being told that they needed ’30 stocks for diversification’ obviously favour stocks – and there’s something special in that,” he said. “If they’ve done it right, they’ve got used to looking into and analysing companies that will go the distance.”
Millennials and members of Gen Z, in contrast, were more interested in companies poised to benefit from the energy transition, such as lithium producers. Through June, Leo Lithium was the fourth most popular security among this cohort, while Lithium Energy came in 11th.
“Investment in the clean energy transition is definitely apparent because the minerals and resources sectors are so strong in Australia,” Marfell said, noting that millennials with million-dollar-plus portfolios favoured Stanmore Resources, South32, Sabre Resources and the Global X Copper Miners ETF.
Established Gen X investors were also particularly keen on US banking giants Bank of America (BoA) and Citibank, as well as big tech stocks, Selfwealth found. “Tesla at fourth, Microsoft at sixth, and Apple at 14th were in the top 15 buys for this cohort in the June 30 lead-up.”
US stocks proved especially popular for Selfwealth investors in June, with 37 out of the top 50 buys by value coming from American companies. Of those, 29 of the top buys were either BoA or Citibank, with an average buy value of US$2.37 million.
And Tesla saw the highest individual buy order for a non-bank, at $3.69 million.
ETFs staying the course
Of the top 50 buys in June, 15 were exchange-traded funds (ETFs), with the Vanguard Australian Shares Index ETF recording the highest buy order for any ASX-listed security, at $3.58 million, the report showed. Baby Boomers preferred ETFs that offer income, such as Betashares’ Australian High Interest Cash ETF, while younger generations exhibited a stronger overall preference for ETFs.
“Today’s younger investor prefers a more casual, low-touch method of ETFs, which don’t require as much fundamental analysis,” Marfell said. “Again, that’s a great thing, because they’re likely to experience less losses than if they had to throw large amounts into a single company, and therefore we’ll soon have less people believing that the stock market is gambling.”
He also sees the ETF boom continuing even as younger generations mature.
“They’re less of an indication of youth and more of the era in which people started investing – they’re a supremely convenient product that offers diversification more effectively than picking single stocks,” he said.
Excluding ETFs, only two ASX-listed stocks were in the top 50 buys by value: CSL and Estia Health.
