Greater numbers of younger investors are using the share market to generate wealth, according to new data from nabtrade, but many are choosing to stick with blue-chip stocks alongside their older investing peers.
Nabtrade director of SMSF and investor behaviour Gemma Dale said record numbers of generation Z and Y investors entered the market last year, increasing by 73 per cent and 20 per cent respectively in the 12 months to 31 December 2018.
Dale said the growth had been taking place over the past two years and the new entrants “are serious investors, who are studying the local and international share markets closely and buying shares they know, and investing for the long term”.
Despite this growth, she said there was little movement in the top 10 domestic stocks held across the generations of investors who instead opted to reweight sector exposures during the year.
“Our data showed baby boomers and gen X investors reduced their overall exposure to financials, consumer discretionary and telcos, but increased their holdings in healthcare, consumer staples and material stocks,’’ she said, adding this was recognition of how overweight some of these sectors had been for long-term investors.
“Interestingly, gen Y investors slightly increased their exposure to financials during the year by 1.5 per cent, but reduced their holdings in materials, healthcare, consumer discretionary and telcos.”
The top 10 domestic stock purchases among baby boomers and gen Xers were traditional blue-chip stocks such as National Australia Bank, Commonwealth Bank of Australia, Westpac, BHP and Telstra, while top picks among gen Y and Z investors were A2 Milk, Afterpay, AMP and Vanguard’s ASX200 ETF.
Nabtrade also found demand for international shares grew by nearly 30 per cent in 2018, including among younger investors where online trades increased 38 per cent among gen Z investors, 32 per cent for gen X and 31 per cent for gen Y.
“Australian investors, particularly younger investors, understand that while the Australian share market offers some great opportunities, many critical, fast-growing sectors are not well represented on the local bourse,” Dale said.
“These investors are generally pursuing two key thematics – technology and the rise of the Asian consumer – and they’re choosing to do that directly into the US or Asian markets.”