More younger Australians buying and holding equities in 2023, despite reduced portfolio diversity

Dan Jowett

According to the inaugural analysis of over 300,000 sponsored accounts by trading and wealth fintech Openmarkets, 64% of trades by Generation Y and Z in Q1 2023 were buys, outpacing Generation X with 61% and Baby Boomers with 54%.

In addition to strong buying, the data also reveals younger Australians are trading less frequently than older generations, with an average of 10.7 annual trades compared with 16.3 trades for Generation X and 27.3 trades for Baby Boomers.

All generations over the past year reduced diversity in their portfolio, with young Australians holding 4.5 equities, Gen X Australians holding 6.1 equities and Baby Boomers holding 9.1 equities on average. Over the past year, Gen Y and Z Australians have reduced their equity holdings by 6.7 per cent and ETF holdings by 3.3 per cent.

Other key findings include:

• Generation Y and Z are trading small caps most often, with lithium stocks seeing most buying activity.
• The most bought stock for Gen Y and Z in Q1 2023 was lithium company Pilbara Minerals, followed by coal miner Stanmore Resources and lithium company Core Lithium Ltd.
• Younger generations’ interest in Exchange traded funds (ETFs) climbed in Q1 2023 from 27 per cent to 29 per cent of total trades. Of all ETF holders, 40 per cent had Australian exposure, 11 per cent had US exposure and 43 per cent had exposure in other developed markets.
• Generation X and Baby Boomers traded large cap equities far more frequently, with a strong focus on the banking sector. These trends were not seen in Generation Y and Z.

Openmarkets CEO Dan Jowett says Generation Y and Z’s buy-and-hold mentality shown here challenges stereotypes of this generation in following ‘hype’ and higher-risk strategies.

“In an era where young people are often associated with ‘hype’ stocks, finfluencers and short-term wins, it is interesting to see this is not necessarily reality. Our data shows younger Australians are trading less, sticking to stocks they know and gradually accumulating them to build long-term wealth.

“What also stands out for all generations, is that portfolios are becoming marginally less diverse, adding risk as market volatility continues. All investors should understand the impact of risk and volatility on portfolios as they consider short and long-term goals.”