YOUNGER CROWD FUELS GROWTH

Younger investors are increasingly embracing exchange traded funds. The average age of an ETF investor is 39, down from 58 five years ago.

Diversification is the main driving factor for using ETFs, according to Investment Trends. “Millennials are expected to be significant drivers of future ETF growth,” says Recep Peker, the research director.

Thirty-eight per cent of ETF investors invest via a self-managed super fund (SMSF).

SMSF investors use ETFs for a wide range of reasons, citing their access to overseas markets and specific investment types as important factors. They are more comfortable with ETFs than they are with managed funds, according to Peter Hogan, from the SMSF Association.

He says ASX data shows that financial planners struggle to get SMSF investors to invest in managed funds. “SMSF investors want to have an argument with the fund manager and what companies they buy.”

Active managed funds do not typically tell investors what they’re investing in at the time, whereas ETFs reveal their investments daily. For example, the Magellan Global Equities managed fund has a special disclosure agreement and does not have to disclose its investments more regularly than every two months.