- Proportion of retail investors with exposure to Australian markets in their portfolio rose from 82% to 87%
- Nearly one in five Australian investors will increase investments in local stocks from Q4 onwards
- Gen Z is ahead of the trend, with a 15% increase in those holding local stocks from Q2 to Q3
- Aussies 15% more likely to raise cash allocation, despite already being more likely to hold cash compared to investors around the globe
Aussie retail investors’ have a greater appetite for local stocks and cash than their global peers, according to data from the latest quarterly Retail Investor Beat from trading and investing platform eToro.
In the study of 10,000 retail investors across 12 countries and 3 continents, including 1,000 retail investors from Australia, the proportion of Australian investors with exposure to the Australian market in their portfolios increased 5% (from 82% to 87%) from Q2 to Q3, meaning that nearly nine in ten respondents are now investing in their home market across different asset classes.
Nearly one in five (19%) Aussie investors said they will increase their allocation to locally listed stocks from the third quarter onwards. This is 27% higher than the global average (15%), demonstrating Aussies’ faith in homegrown companies.
When it comes to asset class allocation, the proportion of Australian investors holding cash and FX increased quarter-on-quarter, whereas this decreased for overall respondents. Conversely, the percentage of Australian investors holding commodities, domestic bonds and foreign bonds fell, while these asset classes became more popular among global respondents.
Global retail investors holding cash assets fell from 69% to 67%, and those holding FX fell from 26 per cent to 25 per cent. While the percentage of Australian retail investors holding crypto, domestic bonds and commodities has dropped since Q2, the percentage of global retail investors investing in all three asset classes has increased during the same period.
Commenting on the data, eToro Analyst Josh Gilbert, says: “Aussies’ preference for local stocks comes at a time when we’re seeing the beginning of a worldwide rotation away from US tech mega-caps. Where Australia is departing from broader global trends is in the declining proportion of Australians holding commodities, domestic bonds and foreign bonds, which reflects persistently high inflation and interest rates in the country continuing to cast a shadow at a time when other markets are beginning to experience rate cuts.”
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Gen Z up portfolio contributions
Gen Z investors are the most bullish on Aussie stocks, with the proportion of those aged 18-27 who hold local equities up 15% quarter-on-quarter (from 34% to 39%) – the biggest jump out of any age group. At the same time, they are cutting back on foreign equities, as the proportion of Gen Z investors holding these assets dropped 13% (from 39% to 34%) over the same period.
The younger the investor, the more eager they were to increase the amount they contributed to their portfolio. Over the last three months, 46% of Gen Z retail investors have increased their portfolio contributions, along with 33% of millennials, 21% of Gen Xers, 13% of Baby Boomers and only 3% of the Silent Generation.
Gilbert says: “It may be surprising to some to see Gen Z’s focus on local stocks given the performance of US equities over the last two years. However, as we begin to see a rotation out of high-flying tech stocks into cheaper, more cyclical assets that the Australian market has in abundance, it just goes to show how savvy retail investors as a whole are. The ASX200 also outperformed the S&P 500 in the third quarter, showing we can compete with the biggest and the best on Wall Street.”
Table shows changes in asset class allocation amongst Australian retail investors in Q3
| Asset class | % of Australian retail investors who held in Q2 | % of Australian retail investors who now hold | % of global retail investors who now hold |
| FX | 17% | 22% | 25% |
| Cash assets | 69% | 73% | 67% |
| Locally listed stocks | 52% | 53% | 54% |
| Alternative Investments | 20% | 21% | 25% |
| Foreign bonds | 16% | 16% | 22% |
| Internationally listed stocks | 29% | 27% | 36% |
| Crypto | 30% | 27% | 34% |
| Domestic bonds | 26% | 23% | 36% |
| Commodities | 31% | 29% | 29% |
Aussies rediscovering love for cash
Whilst investors from every generational group are more likely to be holding cash than they were three months ago, the trend is again most pronounced amongst Gen Z investors, with the proportion of investors in this age group who hold cash jumping 14% quarter-on-quarter (from 63% to 72%). Aussies love for cash goes against the grain, since the proportion of global retail investors holding cash has fallen across all generations compared to three months ago.
Aussies were already 9% more likely than global retail investors to hold cash (73% vs 67%) in Q3. With the RBA reaffirming that rate cuts are unlikely in the near term, 15% of Australian investors said they will increase investments in cash.
Gilbert adds: “It’s not shocking to see more Aussies holding cash than their global counterparts when we look at the trajectory of interest rates globally. Major central banks such as the Fed, ECB and BOE have all cut interest rates, yet Australia remains the outlier, with rates not set to fall until next year. Often, we would see Gen Z’s feeling a little bit more adventurous with their investments given their time horizon, but I think the substantial rise in cash holdings, compared to other groups, points to what is a challenging period for young people in Australia.
“Our inflation rate remains one of the highest across major economies, and consumers remain unsettled about jobs, which is also coinciding with record high rental prices. When the RBA begins its easing cycle, younger Aussies will feel more confident about adding that cash back into equity markets once again. ”
Table shows changes in equity and cash allocation amongst the different generations of Australian retail investors
| Age group | % QoQ change in those holding local stocks | % QoQ change in those holding international stocks | % QoQ change in those holding cash |
| Generation Z | 15% | -13% | 14% |
| Millennials | -6% | 3% | 12% |
| Generation X | 4% | -17% | 3% |
| Baby Boomer | 7% | -5% | 1% |
| Silent Generation | -9% | -57% | 3% |
*Rounded to nearest whole percentage difference
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Notes to editors
About this report
The latest Retail Investor Beat was based on a survey of 10,000 retail investors across 12 countries and 3 continents. The following countries had 1,000 respondents: UK, US, Germany, France, Australia, Italy and Spain. The following countries had 600 respondents: Netherlands, Denmark, Poland, Romania, and the Czech Republic.
The survey was conducted from 16 August – 2 September 2024 and carried out by research company Opinium. Retail investors were defined as self-directed or advised and had to hold at least one investment product including shares, bonds, funds, investment ISAs or equivalent. They did not need to be eToro users.
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