Aussie investors not scared off by volatility


The rising costs of living and market volatility aren't stopping Australians from putting their money into the stock market.

Data from investment platform Sharesies AU has found that funds under management grew 20% over the last quarter, while trading activity was up 18%.

The ASX 200 returned 7.8% in the first six weeks of 2023 but past performance is of course no indication of future performance.

aussie investors not put off by volatility

The second half of the quarter saw a dramatic drop off in value, as inflationary pressures, rising rates and cost of living caused investors to lose confidence and saw the ASX 200 drop below its 2023 starting point.

However, that is beginning to turn, with a 3.3% upswing in the last week of March, but Brendan Doggett, managing director of the Sharesies Australian office, says Sharesies investors tend to stay away from the day-to-day.

"We have seen that our investors see this volatility as the peaks and troughs of the market, but they know that typically over time markets go up," he says.

Brendan says there are less traders on the platforms and more long-term investors who are utilising dollar-cost averaging strategies to get ahead.

"You invest a certain amount of money into same thing regularly and you don't worry about the price. But in saying that, our investors recognise that when the market is in a downturn it's a great time to buy in," he says.

The platform also saw new investors in the Australian market grow by 29%, the highest quarterly growth over the last 12 months.

"We see people are still interested in investing, but it's less discretionary purchases on stocks doing well, but rather using investing as part of their savings strategy," he says.

Brendan says this is probably the driving force behind the top 10 being made up primarily of ETFs and companies in the resource sector.

Vanguard Australian Shares Index ($VAS) which tracks the ASX 300 was the top bought stock for the quarter, followed by Fortescue Metals ($FMG) and Anson Resources ($ASN).

Fortescue Metals ($FMG) was also the platform's most sold stock, followed by BHP Group ($BHP) and Kogan ($KGN).

Sharesies also lets investors buy and sell US stock, and no surprise that consumer favourite Tesla ($TSLA) was both the most bought and sold stock for the quarter.

Not only was it the top stock on Sharesies but it was also top of the pops on trading platform Stake.

Tesla has routinely been the top-bought US stock but recently the data on Stake shows a flight to diversification.

Market analyst for Stake, Megan Stals says investment strategies have started to shift due to the period of higher volatility.

"Growth stocks have also become less of a focus in recent months. The tech heavy NASDAQ 100 ETF was the most popular ASX-listed ETF for US stocks from October to December 2022 but was overtaken by the iShares Core S&P 500 ETF in the first three months of 2023, as investors look for more diversification across a broader range of sectors," she says.

However the watchlist stocks show that Stake investors are ready to pounce back into the tech sector says Megan.

"Microsoft emerged as the most popular stock to be added to Stake customer watchlists over this period, as they look to gain exposure to ChatGPT, and Amazon and Alphabet also made it to the top ten," she says.

Here at home, Stake investors are like the Sharesies audience, with resources and ETFs dominating the top 10.

Vanguard Australian Shares Index ($VAS) took out pole position, with Pilbara ($PLS) and Core Lithium ($CXO) rounding out the podium.

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Eliot Hastie was a senior journalist at Money magazine in early 2023. He was previously a producer and presenter at ausbiz where he covered startups, small caps, cryptocurrency and every other investible opportunity for Australians. Eliot has a Bachelor of Arts (Honours) in Journalism from the University of Westminster. He tweets at @Hastie93.