Highlights from the 2021 First Half Australia Trading Behaviour Survey

Thank you

Thank you again for taking part in our 2021 First Half Australia Trading Behaviour Survey. As we navigate these uncertain times, your participation continues to provide valuable insights, helping service providers better understand your preferences and investing needs. An important goal for us, and service providers who support this survey, is to translate these insights into better services and outcomes for you. This short report gathers some of the most interesting results from the research. I hope you find it as fascinating and insightful as we did. Yours sincerely, Mark Johnston Executive Chairman and Founder Investment Trends 23.02 Tower 3, International Towers 300 Barangaroo Ave, Sydney NSW 2000 Australia

Table of contents

Methodology and scope ................................................................................. 4. Total number of investors .............................................................................. 5. Average return expectations ......................................................................... 6. Changing current situation ............................................................................ 7. Prompts to start investing ............................................................................. 8. Prompts to resume trading ........................................................................... 9. Educational content ..................................................................................... 10. Encouraging the next wave .........................................................................11. Cryptocurrency ...............................................................................................12. About Investment Trends ............................................................................13.

Methodology and scope

The 2021 First Half Australia Trading Behaviour Survey examines the attitudes and behaviours of online share investors in detail. The findings in this pack are based on a quantitative online survey conducted between March and April 2021. A total of 19,453 valid responses were received after data cleaning, of which 13,948 placed an equities trade online in the preceding 12 months. The maximum sampling error (centre of the range) at the 95% confidence interval for this online investor sample is +/-0.8%. It must be noted that analysis of smaller subgroups would have a higher sampling error. This is our twenty-fourth bi-annual edition of this report. Investment Trends has researched the Australian Online Investing market continuously since 2008.

Total number of investors

The number of active online investors has continued to grow in the last six months

As of May 2021, we estimate 1.43 million unique individuals placed at least one online trade in listed securities in the preceding 12 months, up 12% from December (1.25 million) and 35% year on year. This growth continues to be supported by the ongoing participation of existing investors and inflows of new-to-market and reactivated investors.

Average return expectations

Optimism about Australian equities has slowed, but remains in positive territory

We track Australian investor sentiment by looking at their capital gain expectations from the All Ordinaries Index over the coming 12 months (excluding dividends). In May 2021, online investors expected the Australian stock market to grow by 3.3% in the year ahead, on average. This is a decrease from 5.7% only six months prior in December 2020, but markedly higher that the RBA cash rate.

COVID 19 retrospective

Online investors have seen an increase in their savings and cash flow as a result of the lockdowns

For 50 percent of online investors, the pandemic has had a positive impact on their savings, while one in three say they experienced an increase in cash flow. Mental well-being has taken a hit, with close to one in four (23%) online investors reporting a worsening of their personal condition.

Prompts to start investing

New investors are attracted by the ability to invest small amounts and the desire to learn a new skill

The factors prompting Australians to place their very first trade in the first half of 2021 are similar to what prompted them in the second half of 2020. The main catalysts were the ability to invest with small amounts of money (46% cite this) and a desire to learn a new skill (44%), with the low-rate environment (32%) rounding out the top three. Consistent with relative stable market conditions at the time of the study, fewer new-to-market investors mention COVID-induced market volatility as a prompt to start (22%, down from 36% in Dec 2020).

Prompts to resume trading

The ability to invest small amounts has also been a significant driver of reactivation

Similar to new online investors, previously dormant investors who returned to online investing in the first half of 2021 most often mention the ability to invest small amounts of money as the key

driver. Having more time (26%), the low interest rate environment (25%) and market outlook (25%) all had similar importance in driving reactivation. Tax optimisation benefits are often a popular incentive to reactivate in the lead to EOFY (18%, up from 5% in December 2020).

Educational content

Younger investors turn to ASX, social media, and educational websites to fill informational gaps, while older investors are more likely to trust their platform

Online investing platforms are faced with the challenge of retaining new-to-market and established investors who are hungry for education and decision support material. However, different age groups turn to different sources for their information needs. Zoomers and millennials are more likely than older investors to trust the ASX, educational websites or social media influencers for investing-related content. In contrast, almost two-fifths of retirees and pre-retirees trust the content delivered by their trading platform.

Cryptocurrencies

Fully one in five online investors believe cryptocurrencies will deliver better returns than equities or property over the next year

Australian investors are more bullish on international equities (31%) than ASX-listed names (26%). One in five online investors believe that cryptocurrency will outperform equities and property in the next 12 months. Zoomers (37%) and millennials (29%) and are more likely than older investors to hold this view.

About Investment Trends Investment Trends is a specialist financial services market research organisation providing business insights and decision support information to many of the world’s leading financial services organisations. We combine analytical rigour and strategic thinking with the most advanced market research and statistical techniques to help our clients gain competitive advantage. As a company we aim to improve the lives of millions of investors by making the whole financial services industry better. Our research coverage spans eight countries across Australia, Asia, Europe and the US. Our work is focused on helping clients answer three fundamental questions:

1. How does the market currently work? 2. How is the market evolving? 3. How do I improve business outcomes:

o Increase customer satisfaction o Develop the products investors want o Introduce tools and services necessary to enhance the customer experience o Use technology to engage and support investors

Our clients include industry regulators, leading local and global banks, investment platforms, leverage trading providers, fund managers, superannuation and pension funds, product issuers and manufacturers and financial planning software providers.

Investment Trends Pty Ltd 23.02 Tower 3, International Towers

300 Barangaroo Ave, Sydney NSW 2000

Australia

Phone: +61 2 8248 8000 sales@investmenttrends.com

www.investmenttrends.com © Copyright 2021 Investment Trends Pty Limited. All rights reserved. The material in this pack (“Highlights from the 2021 First Half Australia Trading Behaviour Survey”) contains proprietary information including copyright material and trademarks, the rights to which must be respected. Investment Trends owns the copyright in the design, selection, arrangement, production, as well as in the material originally developed by or for Investment Trends. The copyright material is provided for your personal only. Otherwise, and except as permitted by law, no copying, publication, modification or commercial exploitation of the Report is permitted without the prior written permission of the owner. Except for any rights under any legislation in Australia or any other relevant jurisdiction which cannot be excluded or limited, Investment Trends does not provide a warranty with this Highlights Pack or give an assurance as to its accuracy or reliability. Investment Trends shall not be liable for any damages you suffer, or which are claimed against you by a third party, arising out of use of the Highlights Pack.