The rise of the retail investor shows little sign of abating


Dr Irene Guiamatsia

Key points:

  • 1.43 million unique individuals placed at least one online trade in listed securities in the 12 months to May’21, up 35% year on year, and nearly double pre-pandemic levels
  • Inflows remains healthy – 148,000 new online investors placed their first trade in only the past six months
  • Cryptocurrencies have once again captured the attention of Australian online investors, particularly Zoomers

Leading research firm Investment Trends has launched its 2021 1H Online Investing Report, an in-depth study of online equities and listed securities investors in Australia.

The latest Report highlights continued strong growth in Australia’s population of retail online investors that began in 2020. An estimated 1.43 million individuals placed one or more trades in listed securities in the 12 months to May 2021, up 14% from December 2020 and 35% year-on-year.

“The pandemic has significantly shifted the Australian investing landscape throughout 2020 and this continued through the first half of 2021,” said Irene Guiamatsia, Head of Research at Investment Trends. “To put things into perspective, the number of active retail online investors, that is those who bought or sold securities in a 12-month period, has almost doubled compared to pre-pandemic levels, from 750,000 to 1,430,000.”

While some believe the surging interest in online investing may be short-lived as lockdown restrictions ease and Australians spend less time indoors in front of computer screens, the Report shows that inflows of first-time investors in the first half of 2021 remains healthy. Nationwide, 148,000 new online investors placed their first trade in the past six months alone, compared to 170,000 in the second half of 2020.

“It’s encouraging to see so many Australians starting their investing journey,” said Guiamatsia. “Challenger brands like SelfWealth, Stake, eToro and Superhero are growing their footprint among these first-time investors with sharp pricing, feature rich platforms and mobile-first UX.”

Along with rising adoption in equities investing, the Report also reveals growing interest in cryptocurrencies. In the last six months, the proportion of online investors who say they hold cryptocurrencies has increased sharply from 8% to 13%, while a further 10% say they intend to start investing in digital currencies over the next 12 months.

“The rapid rise in novel cryptocurrencies like Dogecoin, which valuation surged from $0.01 to $0.68 between January and May 2021, has certainly captured the imagination of many investors, especially Zoomers and Millennials,” said Guiamatsia.

“While there may be concerns about investor exuberance for relatively volatile digital assets, our research shows diversification and long-term investing are investors’ top cited reasons for holding cryptocurrencies – rather than speculative purposes.”

Twice each year, Investment Trends measures client satisfaction with their main online investing platform across 16 key service areas, including overall satisfaction. Among full-functionality investment platforms – those that offer domestic and international equities –  Interactive Brokers leads in overall satisfaction with 90% of clients rating it as ‘good’ or ‘very good’. SelfWealth and Bell Direct round out the top three.

Investment Trends recognises the best performers in select categories based on the highest client satisfaction ratings. In 1H 2021, the winners in each category are:

Overall satisfaction: Interactive Brokers
Value for money: SelfWealth
Functionality: CommSec
Customer service: Bell Direct
Mobile platform/app: CommSec
Education materials/programmes: Bell Direct

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