ASIC research shows rise of unregulated investing
The Australian Securities and Investments Commission (ASIC) has released investment behaviour research showing what it views as a concerning rise in unregulated, volatile crypto-asset products.
The Report 735 Retail investor research (REP 735) captured retail investor motivations, attitudes and behaviours in the period following the onset of the COVID-19 pandemic. It surveyed 1,053 Australian retail investors aged 18 and over who had directly traded in securities, derivatives or cryptocurrencies at least once since March 2020.
Of the 1,053 retail investors surveyed, 44% reported holding cryptocurrency, making it the second most common product type held after Australian shares at 73%. A quarter of surveyed investors who held cryptocurrency indicated that cryptocurrency was the only investment they held.
The research also showed that, after bank trading platforms (used by 31% of surveyed investors), the three most commonly used platforms all specialised in cryptocurrency.
ASIC chair, Joe Longo, said: “We are concerned about the number of people surveyed who reported investing in unregulated, volatile crypto-asset products. This research does highlight during this particular point in time, the appeal of crypto-assets to the market.
“According to the survey, only 20% of cryptocurrency owners considered their investment approach to be ‘risk-taking’, raising concerns that investors did not understand the risks of this asset class.
“ASIC is also concerned that there are limited protections for crypto-asset investments given they have become increasingly mainstream and are heavily advertised and promoted. There is a strong case for regulation of crypto-assets to better protect investors.”
The research also showed investors were using a range of online trading platforms that offered easy access to a range of products. Many investors were also using digital channels and social media platforms to source information on investing.
Since March 2020:
- 34% of surveyed investors reported sourcing information from Google searches
- 41% of surveyed investors reported sourcing information from social media and networking platforms, including YouTube (20%), Facebook (11%), podcasts (10%) and financial influencers (10%).
With more than half (51%) of new investors aged between 18 to 34 years old, Longo said, “It’s encouraging to see more people, particularly younger investors, engaging in the market. A third of all surveyed investors said they are ‘in it for the long term’.
“However, half of those surveyed admitted they have invested in things because they didn't want to miss out. This, coupled with more complex and opaque financial product and service offerings, and the speed and reach of marketing and distribution through digital channels, may expose investors to new risks or higher levels of existing risks.”
REP 735 was prepared by SEC Newgate in close consultation with ASIC. The research used a mixed method approach involving a preliminary qualitative research phase (conducted in August 2021) followed by a nationally representative online survey (conducted in November 2021).
Recommended for you
Platinum Asset Management has put its two closed-end funds under strategic review in a bid to reduce the share price discount to pre-tax NTA and maximise shareholder value.
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.
