In the year 2000, about a third of Australian adults who owned shares directly had just one stock in their portfolio. Another third owned two or three stocks.[1]  

The average number of stocks held was six and the average portfolio was worth $28,000 [2].  Remarkably, only 8 per cent of shareowners held 11 stocks or more in 2000 [3] – a level closer to today’s standards of a diversified share portfolio.

Back then, men were far likelier than women to own shares [4].  And adults with higher education, incomes, and household assets were likelier to invest directly in shares and own more of them. 

Retail investors used ASX almost entirely for shares, barely traded each year [5], and mostly used a full-service stockbroker if they did buy or sell [6]. The average trade was $2,000 [7].

This is just a glimpse of share investing from the Australian Securities Exchange’s 2000 Australian Shareownership Study [8].  It’s also the starting point to consider one of the great trends in ASX’s “modern history”: the changing composition of Australian share ownership.

To recap, ASX in October 1998 became the world’s first exchange to demutualise and list directly on its own exchange. [9] We’ve chosen that date as the start of ASX’s modern history for this series of commemorative features.

The previous story in this series examined the evolution of Initial Public Offerings (IPOs) on ASX. Future stories will consider the growth of listed funds, such as Exchange Traded Funds, Listed Investment Companies, and Australian Real Estate Investment Trusts (A-REITs).

The 2000 Australian Shareownership Study was the first survey after ASX’s demutualisation. It was also a pivotal time for share investing in this country. 

After a decade of large floats, government privatisations, and demutualisation in the 1990s, share ownership boomed. About 5.7 million Australians, or 41 per cent of adults, owned shares directly in 2000. [10] The proportion of adults with on-exchange investments peaked at 44 percent in 2004 and has edged lower and stabilised since then. [11] 

Care is needed comparing share ownership studies. Each is based on a sample of investors and survey methodologies have changed slightly over the years. However, the broad trend is clear: the 1990s were a period of rapid growth in direct share ownership in Australia.

By 2000, direct share ownership in Australia was higher than in the United States, the United Kingdom, Germany, Canada and New Zealand (as a proportion of their adult populations). [12] For the first time, Australia became a nation of share owners. 

That was also the year of the dot-com crash. Technology stocks boomed in the lead-up to 2000 due to the massive uptake of the internet. But when the tech bubble burst in March that year, a bear market ensued, giving a new generation of investors their first market crash.

Amid all the volatility, millions of Australians still held shares directly in 2000. Even though most only held a few shares, that was the foundation for profound changes in the composition of share ownership, and investor behaviours and attitudes over the next two decades.

Share ownership today

About 6.6 million Australian adults, or 35 per cent of the population, now hold listed investments, according to the ASX Australian Investor Study 2020 [13]. 

Almost a quarter of current investors began investing in the last two years. Women made up 45 per cent of new investors in the previous 12 months. [14]

Importantly, the 2020 ASX study shows improving gender balance in investing, the emergence of younger investors and greater focus on portfolio diversification.  In short, more Australians, from more walks of life, are owning a wider range of listed investments via ASX. [15]

Compared to 20 years ago, investors today have far greater interest in owning investments across a range of industry sectors and asset classes, and Australian and international investments, via ASX.  

Investors might use an Exchange Traded Fund (ETF) on ASX for exposure to hundreds of Australian or global stocks, or to a megatrend, such as cybersecurity or artificial intelligence. 

They could use an ASX-quoted fund or Listed Investment Company or Trust for exposure to fixed interest, small-cap shares or other asset classes. Or options to protect their portfolio’s value or warrants to trade or invest.

The IPO market on ASX has been another source of opportunity. In 2000, there were 1,405 listed companies on ASX. In 2020, there were 2,049 [16]. On average, ASX has around 120 new listings each year that add to and replenish listing volumes as other companies leave [17]. 

Over the years, household-name IPOs have attracted many new investors to share investing. Since 2015, tech companies have been a strong source of IPOs on ASX. Tech is now the fast-growing sector on ASX, and the top sector by number of IPOs. [18]

So, as the breadth and depth of ASX markets has grown over the past 20 years, investors have had more opportunity to construct and maintain diversified portfolios using listed investments across asset classes. And potentially benefit from long-term growth in the value of listed assets. 

At end-December 2000, the S&P/ASX All Ordinaries index (a barometer of the market’s largest 500 companies) was 3,154 points. Twenty years later, it was 6,850 points [19].  Returns are higher again once dividends are included. The combined market capitalisation of ASX-listed entities increased from just over a trillion dollars in 2000 to almost $2.4 trillion in 2020. [20]

Trend 1: More women are investing 

Existing investors are still predominantly male (58%) and middle-aged (average age of 46) [24]. But there has been a sharp increase in the proportion of female investors. 

Forty-five per cent of those who began investing in the last 12 months were female, up from 31 per cent among 5-10 years ago, the 2020 ASX Australian Investor Study found.

This trend is likely to quicken in coming years because 51 per cent of intending investors are women. Younger women, in particular, are showing greater interest in investing to build wealth. Compared to 20 years ago, when men were far likelier to own shares than women, growth in female ownership of listed investments is an encouraging trend. 

However, more can be done to help new female investors. The latest ASX study found women investors tended to hold fewer assets, were less diversified, and were more risk averse and circumspect in their approach to investing than male investors. They were also less aware of investment options, such as ETFs.

Against that, female investors are keen to become more knowledgeable about investing, are willing to consult various information sources, and engage professional advice (provided it is cost-effective). That suggests many more women holding more listed investments this decade. 

Trend 2: Younger people are entering the market in larger numbers 

An estimated 900,000 non-investors planned to invest within 12 months. [25] Their average age: 34. 

“Next Generation” investors (aged 18-24) comprised just over a quarter of intending investors. [26] In theory, that means almost a quarter of a million Australians in their late teens and early twenties could start investing over a 12-month period. 

Investment intentions do not always translate into actions. But a third of Next Generation respondents said they invested all their spare cash between March and May 2020, suggesting they took advantage of lower asset prices during the COVID-19 sell-off [27]. About a fifth of them increased their allocation to Australian shares in the first half of 2020.

The Next Generation investor response to investing spare cash during the market downturn was almost double that of Wealth Accumulators (aged 25-59).

However, this finding implies some recent market entrants engaged in short-term speculation rather than long-term wealth creation during the first half of 2020, potentially risking losses if higher sharemarket volatility returns.

Trend 4: Strong interest in ETFs and instant portfolio diversification 

As investors become more active, they also want greater portfolio diversification. Next Generation investors, in particular, are embracing listed funds on ASX, such as ETFs and LICs, that provide exposure to dozens or hundreds of securities – and instant diversification. 

Among Next Generation respondents, 45 per cent said they intended to invest in ETFs over the next 12 months and 35 per cent wanted to buy LICs [30]. Almost a third of Wealth Accumulators wanted to invest in ETFs in the next 12 months.  

ETFs have become a popular entry point for younger investors. When asked about their first investment, 8 per cent of Next Generation said they used an ETF [31]. Twenty years ago, most Australian investors hadn’t heard of ETFs and there were fewer LICs on ASX. 

ETFs and LICs can improve portfolio diversification. Although 60 per cent of investors felt their portfolio was diversified [32], many others said their portfolio was not sufficiently diversified. Investors who self-assess their portfolio might have different views of what diversification means.

Nevertheless, compared to 20 years ago, when owning a few shares was the norm, investors have better diversification thanks to growth in share ownership and listed funds on ASX.

Trend 5: Renewed interest in financial advice 

Investors are more interested in paying for financial advice. About 17 per cent of non-advised investors said they were more likely to consult an adviser after COVID-19. And almost two thirds of respondents said they were open to receiving financial advice. [33]

Financial advice was beneficial during COVID-19. Among respondents, 84 per cent found the advice from their adviser in the pandemic was helpful. [34] Advised investors were likelier to invest all their spare cash during the market sell-off in 2020 and buy Australian shares. 

There is scope for many more Australians to get financial advice. Only 27 per cent of investors said they invested through a financial adviser, stockbroker or wealth manager in the past 12 months [35]. And 37 per cent said they would not use an adviser because they were hard to find or too expensive. There is a lingering misconception that advice is for wealthy people.

Lots of investors could benefit from financial advice. The latest ASX study said many portfolios are still concentrated in a few assets lacking sufficient diversification. 

Trend 6: Investors are using digital channels to become more informed 

In 2000, stockbrokers, accountants and financial planners were the main sources of investment advice. [36] Today, a new generation of younger investors is using online information and tools.

Investors want information through a mix of digital and in-person channels. Emails, PDF documents and online reading materials rate highly with all investors. 

Younger investors, in particular, favour YouTube videos on investment information and digital investment platforms, such as micro-savings apps. One in five current investors said they use digital platforms and 22 per cent of intending investors said they planned to use them in the next 12 months. [37]

Over the past two decades, ASX has provided more investor information and market insights online, across a range of channels, to meet these needs.

The ASX’s Investment tools and resources section provides resources for new investors or those wanting to learn more. ASX online courses cover Shares, Options, ETFs and ETPs and Bonds.