Speaking in Sydney today to mark the release of BetaShares’ annual ETF report, CEO Alex Vynokur said he predicts that the ETF industry will continue to witness product innovation throughout 2018.
In particular, he said BetaShares was “humbled” to experience strong demand for ethical investing via ETFs.
“That's certainly one area that we haven't expected,” Mr Vynokur said.
“Even when we were starting our business [we didn’t expect] to see the ETF business be associated with this.”
However, he noted that this development is consistent with higher volumes of Millennial investors adopting ETFs.
Courtesy of this demographic shift, Mr Vynokur said BetaShares has been learning more about ethical and sustainable investing.
“We think there's still a long way to go, we're only just in the very, very early steps and i think more and more investors will start embracing ethical investments,” he said.
“We certainly think ETFs have an opportunity to become the natural vehicle through which those investments are actually made.”
The report, developed in partnerships with research specialist Investment Trends, revealed that Millennials make up nearly one-third of “next wave” investors, or investors eager to try out ETFs.
Noting that overall numbers of “next wave” investors were at the highest level that BetaShares and Investment Trends have seen, Investment Trends research director Recep Peker said the surge in Millennial numbers was significant due to historical difficulty in encouraging younger generations to invest.
Mr Peker suggested the Millennial interest in ETFs could be due to the relative ease of ETF investments, observing that the main barrier to investing for younger generations is a lack of understanding of what to invest in or where to start.
It doesn’t hurt that low interest rates and housing affordability challenges are also fuelling younger demographics to reconsider traditional modes of wealth creation, Mr Vynokur added.
The overall shift towards younger ETF investors means the average age of new ETF investors, or those who began investing in ETFs in the last year, is now 42. Five years ago that age was 56.
Mr Vynokur said, “The ETF industry has continued to grow and mature in Australia, and this year we are seeing evidence of a marked change in the type and age of investors as it becomes more mainstream.
“This generation of investors is redefining ‘blue chips’, with traditional ASX market darlings giving way to global technology, healthcare and sustainability leaders.”