State Street Global Advisors’ (SSGA) 2024 ETF Impact Survey canvassed investors from eight countries across North America, Europe and Asia, including 260 retail investors and 50 institutional investors in Australia.
According to the research, some 45 per cent of the Australian cohort used ETFs in their portfolios during April 2024, up from 27 per cent in December 2022.
This was in line with usage in the US, but smaller than retail usage in Singapore and Japan which stood at 60 per cent and 48 per cent. However, it did see the greatest change of the countries over the period at 66 per cent compared to less than 15 per cent for the other countries.
Breaking it down through the generations, Australian Millennials in the retail investor space are the highest ETF users at 65 per cent. This is followed by Generation X at 44 per cent and Baby Boomers at 31 per cent.
SSGA global chief business officer, Anna Paglia, said: “The rapid growth and lower cost of ETFs since their introduction over 30 years ago has made it easier for people from all walks of life to become investors.
“However, despite their popularity, significant investor education still needs to be done to close the knowledge gap about ETFs. With so many ETFs in the market, it’s understandable how difficult it can be for investors to choose funds that fit their goals and objectives.”
Institutional investors
Looking at the insto space, Australian institutional investors are now second only to Japan in the take-up of ETFs. Some 78 per cent of Australian institutional investors use ETFs either extensively or frequently in their firm’s portfolio, behind Japan at 82 per cent.
Australia is ahead of the Netherlands at 71 per cent, Switzerland at 67 per cent, Singapore at 66 per cent, the UK at 64 per cent, and the US at 61 per cent.
The appeal of ETFs differed markedly around the world, noted Jonathan Shead, SSGA head of investments for Australia.
“Performance and reputation are the two most important criteria that Australian institutional investors use when choosing between ETFs. In comparison, Swiss, Dutch and Japanese investors focus on cost, while US, UK, Swedish and Singaporean investors favour liquidity.”
He noted that only one-third of Australian institutional investors are worried about geopolitical tensions sweeping the world. Some 58 per cent say they are optimistic about the Australian economy and 56 per cent are optimistic about the global economy.
“The relative comfort institutional investors may have about global instability may explain why 50 per cent of Australian institutions are bullish about the domestic economy and the international outlook,” he explained.
“For this reason, almost 80 per cent of Australian institutional investors now include domestic and international ETFs extensively or frequently within their portfolio.”
