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.
Why this cohort is dominating ETF flows
As it stands in 2022, 1.7 million Australians are now invested into exchange-traded funds (ETFs); that represents 33 per cent growth on a year ago. For the uninitiated, an ETF is simply an investment product, structured as a unit trust, which holds shares on behalf of the investor and is listed on a stock exchange like the ASX.
ETFs have been widely celebrated as one of the most important financial innovations in the history of finance, alongside the index fund pioneered by Vanguard. The sector began with a diverse range of index tracking options, such as those that replicate the S&P500 (US Market) or S&P/ASX200 (Australian market)
Australia now stands out around the world with a fast-expanding range of ‘active’ and thematic ETFs that allow investors and financial advisers to tilt their portfolios in many ways. Today, issuers such as BetaShares, ETF Securities and Van Eck offered exposure to everything from renewable energy to hydrogen, robotics and cyber-security.
The pandemic and associated lockdowns saw first-time investors hit historic levels, but this adoption has reached new highs in 2021, primarily driven by younger women, aged 18 to 34. This cohort represented some 21 per cent of new ETF investors in 2021, according to research firm Investment Trends’ ETF Investor and Adviser Report.
This may well bode well for the future of the market, that is if the finfluencer and discussion groups are anything to go by. A growing number of popular podcasts are attracted thousands of women to investing for the first time, with Irene Guiamatsia of Investment Trends, suggesting they are seeking the perceived ‘cautious’ approach that index funds afford.
The growing popularity of female-led podcasts is spurning a unique range of discussion groups which are more empowering and the complete opposite of the “pump-and-dump” discussions that dominated Facebook and Reddit in 2021. There is a clear focus on “investing for the long-term” and positive support for those worried about volatility.
This could be taken as a positive for the future of investment markets, with the regular nature of investment into ETFs potentially offering a “relentless bid” that will support them during downturns. That is in contrast to the evidence, that has proven time and again that most individual investors tend to sell their actively managed funds after they fall and buy in after they have risen.
Irene Guiamatsia, head of research at Investment Trends, says: “Young women are on a mission to close the gender investing gap and determined to take charge of their financial future. They are eager to grow their knowledge and skills, highlighting education opportunities for issuers, financial advisers and investing platforms.”
