Young Australians established SMSFs at a faster rate in the past 18 months than in the preceding three years and were highly active equity traders, according to a share trading platform.
According to research carried out by Australian Investment Exchange (Ausiex), millennials – born between 1981 and 1995 – represented the fastest-growing section of new SMSF accounts in 2020 at 10 per cent, a rate double that of the period from 2016 to 2019.
The share trading platform also found during the 2021 financial year there was an emerging trend of SMSF accounts being opened by gen Zs (born 1997 to 2012), with the number of SMSF accounts owned by this cohort of investors doubling in the past 12 months.
Ausiex chief executive Eric Blewitt said the peak in superannuation interest from younger Australians was likely due to ongoing government and regulatory reviews of super, which had lifted the profile of the SMSF sector.
“SMSFs have traditionally been the domain of those with higher fund balances and those approaching the decumulation phase,” Blewitt said.
“SMSFs may be appealing to younger people due to the fact they provide greater control over investments.”
In June, the firm released a report, “Australia’s Trading Transformation”, which uncovered between the initial coronavirus lockdown until March 2021 that the number of self-directed investors trading under 25 years old increased by 250 per cent.
“All of this data is painting a picture of much greater interest from younger people in taking control of their financial goals,” Blewitt said.
Ausiex also found that compared to established super funds, SMSFs have been 30 per cent more likely to trade, and to that end 54 per cent begin trading within 90 days of opening compared to 42 per cent of non-SMSF accounts with Ausiex accounts.
In addition, it said the number of female SMSF account holders has increased, with 52 per cent of new trading accounts being opened by women in the 12 months to March 2021.
“The long-held view that Australians do not actively engage with their super until they near retirement looks to be changing,” Blewitt said.
“However, this data raises questions whether advisers and fund managers might need to pivot to attract and retain clients who appear to be paying much more attention to their super and the investments within.”
Despite this growth, research found SMSFs have been less interested in exchange-traded funds (ETF), with those in generation Z having the lowest percentage of ETF investments at 19.23 per cent, compared to older generations, which range from 27 per cent to 32 per cent.