ETFs, int. equities enjoy elevated presence in portfolios

Exchange traded funds (ETFs) and international equities are on track to become a staple of investor portfolios this year as investor demand and positive sentiment continues to rise, according to the latest Investment Trends report tracking online investor behaviour.

The 2024 Second Half Australia Online Investing Report surveyed 11,625 participants, and found that ETFs and international equities now account for 20 per cent of online investor portfolios, rising by three per cent in the previous six months.

Separately, 37 per cent of online investors now have ETFs in their portfolios (up from 31 per cent) and 34 per cent have now invested in international equities.

Yiğit Günhan, Senior Analyst at Investment Trends, said this marked upswing in investor preferences and selections also correlates to an increase in investor optimism, as they now expect to enjoy 6.3 per cent in annual capital return from domestic stocks – up by one per cent from the previous six months.

The report also highlighted a rise in market participation, with 1.33 million Australians placing at least one online cash equity trade in the 12 months to November 2024 – a 50,000-person increase from the previous research conducted in May 2024.

“This data reflects a strong wave of confidence among Australian investors,” Günhan said.

“With sentiment at a 10-year high and returns expectations climbing, dormant investors are re-entering the market in historically high numbers. It’s a testament to the resilience and adaptability of Australia’s retail investing landscape.

“The rising allocation to ETFs and international equities demonstrates a clear pivot toward diversification and global opportunities. Australian investors are increasingly seeking efficient, cost-effective ways to build their portfolios.”

The report also indicated a knowledge gap among online investors when it came to trading costs and foreign exchange fees, with 18 per cent of respondents unaware of extra costs charged by international equity platforms.

“The results show that greater fee transparency is crucial for building trust,” Günhan said.

“With fees being a key factor for investors choosing international equity brokers, platforms with clear and transparent fee structures can build trust and stand out in a competitive market.”