Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 298

More ETF users are younger and female with ESG focus

The 10th annual BetaShares/Investment Trends ETF Report provides a snapshot of the key statistics and drivers in the Australian Exchange Traded Fund (ETF) industry, from the perspective of self-directed investors, SMSFs and financial advisers. The latest report shows a record numbers of investors have entered the Australian ETF market, with some changing characteristics.

Key findings of the report

The insights collected from this round of research are based on responses from around 8,000 investors and 800 advisers:

  • The number of ETF investors in Australia grew by 22% in the 12 months to October 2018, reaching a record high of 385,000.
  • The number of investors holding ETFs through an SMSF rose to 120,000 from 105,000 the previous year, an increase of 14%. Diversification and access to overseas markets are the main drivers for this market.
  • Growth in non-SMSF investors was even stronger, with an increase of more than 24% from 213,000 investors in 2017 to 265,000 in 2018.
  • With increasing mainstream take-up of ETFs, the average age of ETF investors has fallen. 29% of ETF investors are millennials, up from 19% in 2013.
  • The use of ETFs by financial advisers continues to grow, with more than half of all advisers (53%) now recommending ETFs (up from 45% in 2017).

SMSF usage remains strong, and non-SMSF take-up is growing even faster

SMSF ETF investors as a percentage of the total ETF market declined from 33% in 2017 to 31% in 2018, reflecting a surge in the number of self-directed investors who are utilising ETFs outside of SMSFs (up by 52,000 from 2017).

Diversification remains the primary driving factor for SMSFs, with 77% of SMSF investors citing this as a reason for using ETFs, followed by access to overseas markets (65%) and low cost (53%).

The average ETF investor is getting younger

The average age of an ETF investor is 46 years old, down from 51 years old in 2013. About 29% of ETF investors are millennials, compared with 19% five years ago. This trend towards younger investors will be a big part of the ETF growth story in the future.

Source: BetaShares/Investment Trends ETF Report, 2019

Use of ETFs by financial advisers continues to rise

Financial advisers are adopting ETFs in increasing numbers, with more than half of all advisers (53%) now recommend ETFs, and a further 16% intending to use ETFs within the next year.

Number of financial advisers using ETFs in Australia

Source: BetaShares/Investment Trends ETF Report, 2019

51% of financial advisers agreed that the use of ETFs has been of financial benefit to their clients, while 45% said that using ETFs had enabled them to service more clients. However, there is scope for more growth through advice as only 21% of investors say a financial adviser was involved in their most recent decision to invest in ETFs.

We believe that the Royal Commission could have a positive impact on the ETF industry, with financial advisers likely to favour lower cost, transparent products.

Increased interest in responsible investing

The latest study found an increased focus on responsible investing by ETF investors. The market cap of ESG-oriented ETFs grew by a factor of 10 over the last four years, from $77 million in 2015 to $844 million in 2018. One in three ETF investors has already applied the concept of ESG in their investing over the last 12 months, while 25% of financial advisers have expressed interest in more education on socially responsible investing. Our two 'Sustainability Leaders' ETFs, ASX codes ETHI and FAIR, received over $250 million of inflows over the course of 2018.

 

Source: BetaShares/Investment Trends ETF Report, 2019

Outlook for the sector

The Report projects a record 437,000 Australians will be invested in ETFs by September 2019, and we project the Australian ETF industry could end 2019 with $50 to $55 billion in funds under management.

 

More than half of all ETF investors rate their understanding of ETFs as average or lower, suggesting efforts to improve investor knowledge may prove rewarding and increase both new and existing investors’ participation.

Two other major trends are worth noting. First, we are seeing an increased adoption of ETF model portfolios, where advisers or ETF providers pre-mix a selection of ETFs in an asset allocation model. Furthermore, while Australian equities remain important, they have been overtaken by global equity ETFs, and a big growth in non-equity ETFs, especially fixed income.

 

 

Ilan Israelstam is Head of Strategy at BetaShares, a sponsor of Cuffelinks. A summary copy of the Report can be accessed here. This article is for general information purposes only and does not address the needs of any individual.

For more articles and papers from BetaShares, please click here.

 


 

Leave a Comment:

RELATED ARTICLES

It pays to look under the hood of ETFs

Global ETF trends coming soon to Australia

Six charts on how Australians invested in 2022 and why

banner

Most viewed in recent weeks

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

7 examples of how the new super tax will be calculated

You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.

The revolt against Baby Boomer wealth

The $3m super tax could be put down to the Government needing money and the wealthy being easy targets. It’s deeper than that though and this looks at the factors behind the policy and why more taxes on the wealthy are coming.

Meg on SMSFs: Withdrawing assets ahead of the $3m super tax

The super tax has caused an almighty scuffle, but for SMSFs impacted by the proposed tax, a big question remains: what should they do now? Here are ideas for those wanting to withdraw money from their SMSF.

Are franking credits hurting Australia’s economy?

Business investment and per capita GDP have languished over the past decade and the Labor Government is conducting inquiries to find out why. Franking credits should be part of the debate about our stalling economy.

Here's what should replace the $3 million super tax

With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains. 

Latest Updates

Investment strategies

9 winning investment strategies

There are many ways to invest in stocks, but some strategies are more effective than others. Here are nine tried and tested investment approaches - choosing one of these can improve your chances of reaching your financial goals.

Planning

Super, death and taxes – time to rethink your estate plans?

The $3 million super tax has many rethinking their super strategies, especially issues of wealth transfer on death. This reviews the taxes on super benefits and offers investment alternatives.

Taxation

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

Shares

The megatrend you simply cannot ignore

Markets are reassessing the impact of AI, with initial euphoria giving way to growing scepticism. This shift is evident in the performance of ASX-listed AI beneficiaries, creating potential opportunities.

Gold

Is this the real reason for gold's surge past $3,000?

Concerns over the US fiscal position seem to have overtaken geopolitics and interest rates as the biggest tailwind for gold prices. Even if a debt crisis doesn't seem likely, there could be more support on the way.

Exchange traded products

Is now the time to invest in small caps?

With further RBA rate cuts forecast this year, small caps may be key beneficiaries. There are quality small cap LICs and LITs trading at discounts to net assets, offering opportunities for astute investors.

Strategy

Welcome to the grey war

Forget speculation about a future US-China conflict - it's already happening. Through cyberwarfare and propaganda, China is waging a grey war designed to weaken democracies without firing a single shot.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.