Retail investors seek relative safety in managed funds and ETFs

Sharesies’ latest quarterly index shows the platform’s retail investors have become increasingly shy on company-specific investment, favoring a diversified approach in what’s been a volatile period for markets.

Tuesday, October 15th 2024, 4:23PM

by Kim Savage

The platform’s index released this week includes the measure Percentage Invested in Companies (PIC) which averaged 71 percent – the lowest average since mid-2022. The PIC refers to the percentage of investment which goes into individual companies versus managed funds and ETFs.

“What’s surprising is the level of cash coming into the platform, but not going into companies,” says Sharesies co-founder and co-chief executive Leighton Roberts.

“Previously that’s been driven by companies like Nvidia or Tesla, big names getting lots of media attention, whereas at the moment we’re seeing money coming in and going straight into funds, clearly trying to hedge their bets against interest rates, or just holding that in cash, just waiting for things to play out.”

In fact, August saw the platform’s second highest month ever for deposits and although withdrawals also rose, they were outpaced by deposits for the quarter.

Potential wariness on the part of investors was seen in the Sharesies Index headline sentiment figure, which declined from the 45 in the “balanced” range to 31 in the “cautious” range. But Leighton Roberts says investors have shown resilience and appear poised to re-enter the market.

“Could be something to do with waiting for the US election, a lot of that money goes into the US, it’s earnings season at the moment so a bit of opportunity-taking might play out but definitely the interest rate change, people understanding they’re not going to get five to six percent on their deposits so not wanting to miss out on that equities curve.”

The uncertainty in the market keeping investors out of the ring for now was evidenced in the share price volatility of some of the US tech companies in the platform’s top five. Rocket Lab and Tesla surged while NVIDIA’s share price fell two percent for the quarter.

Tags: Sharesies