ASX investors are increasingly embracing market volatility and looking for opportunities to buy when the sharemarket dives.
Nabtrade's director of SMSF and investor behaviour, Gemma Dale, says investors are showing more courage when the market is down.
During the US tariff-inspired sell-off in April, nabtrade recorded its biggest single day of trading ever and most transactions were buys.
Let's investigate.
Dale said a new pattern has emerged since 2020 whereby more investors are taking advantage of market dips to add to their portfolios.
This goes against the traditional thinking that amateur ASX investors tend to panic and sell their shares when the market falls.
In an article published on asx.com.au, Dale said:
nabtrade had its biggest trading day ever when our sharemarket fell after Trump's 'Liberation Day'.
The vast majority of that trade was buying. The same was true of the COVID-19 pandemic and market falls in 2020.
Dales said Aussie investors are demonstrating a change in mindset.
More people seem to view volatility as a chance to buy at lower prices, rather than run from it.
Of course, there will always be investors who panic when markets fall, and buying might not always be the best strategy.
But our data suggests investors are much more focused on opportunities during volatility these days.
Another interesting trend is investors buying exchange-traded funds (ETFs) instead of individual ASX shares during a market plunge.
Dale said:
It was very noticeable from our data that growth-focused investors used ETFs to build their market exposure rather than choose individual stocks.
We saw a big increase in investors using ETFs to take advantage of short-term market moves.
ASX ETFs are an increasingly popular way to invest.
They provide great diversification in a single trade and are an easy way to buy international shares via the ASX sharemarket.
Data from online trading platform Stake also demonstrates the trend in Aussie investors favouring ASX ETFs during market dips.
These were the top 7 ASX ETFs traded on Stake on 7 April during the sharemarket sell-off.
As you can see, more than 80% of trades in these ASX ETFs were buy orders.
Stake's market analyst Samy Sriram said ASX ETFs "dominated trading activity" on the day.
ASX ETF | Buy % | Sell % |
iShares Core S&P 500 ETF (ASX: IVV) | 88 | 12 |
Vanguard Australian Shares Index ETF (ASX: VAS) | 87 | 13 |
Betashares Nasdaq 100 ETF (ASX: NDQ) | 82 | 18 |
Vanguard MSCI Index International Shares ETF (ASX: VGS) | 88 | 12 |
BetaShares Diversified All Growth ETF (ASX: DHHF) | 90 | 10 |
Vanguard Diversified High Growth Index ETF (ASX: VDHG) | 88 | 13 |
BetaShares Australia 200 ETF (ASX: A200) | 86 | 14 |
Note: Rounding will mean some buy/sell ratios do not add up to 100%
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