Expert Investor: Rory Cunningham – Lessons from the 2020 ASX Investor Study

Bryce: [00:01:28] Welcome to another episode of Equity Mates, a podcast where we help you learn to invest in 45 minutes or less. We break down the world of investing from beginning to dividend so that you can hopefully make some returns. My name is Bryce and as always, I'm joined by my equity buddy Ren. How's it going, bro? [00:01:42][13.9]

Alec: [00:01:42] I'm very good. Bryce very excited for this episode. For the first time ever, we've got someone from the ASX on. We've talked about investing for four years and now we've actually got someone from the exchange and it's [00:01:54][12.3]

Bryce: [00:01:54] a good point. So no pressure to our guest. [00:01:56][1.5]

Rory: [00:01:58] Thanks, guys. [00:01:58][0.3]

Bryce: [00:01:59] It's our pleasure to welcome Rory Cunningham to the show. [00:02:01][2.0]

Rory: [00:02:01] Rory, welcome. Yeah, thanks, guys. Pleasure to be here. [00:02:03][2.3]

Bryce: [00:02:04] So Rory is senior manager of investment products at the Australian Securities Exchange, or the ASX. He's responsible for expanding the range of investment products that are available on the ASX and for making those products more accessible to investors throughout Australia. So we'll pick his brains a little later on that. Before joining ASX, Rory held positions at Fidelity Investments and Perpetual Investments, and he holds a Bachelor of Commerce and an MBA from the University of Sydney. So great to have you on. The reason we have you here today, Rory, is because the ASX have just released their investor survey for 2020. And we're very excited to dig into some of that and understand what's going on in the investment landscape. [00:02:45][40.9]

Rory: [00:02:46] Yeah, there's a lot there, so it'll be a good conversation. Thank you. [00:02:48][2.8]

Alec: [00:02:49] Now, before we get into that, we do like to start with a bit of a game overrated or underrated. So we'll throw out a few different ideas for you concepts and get your thoughts on them. And we'll start with a non Australian index. We won't ask you about the ASX straight up. So overrated or underrated, the S&P 500 index. [00:03:07][18.4]

Rory: [00:03:08] Good question. I'm going to go with underrated from an investment strategy point of view. I'm not even going to try to guess around valuation, but I think from an investment strategy point of view, underrated, [00:03:20][11.5]

Bryce: [00:03:21] I guess then we have to follow with the ASX 200, overrated [00:03:23][2.6]

Rory: [00:03:24] or underrated is [00:03:25][1.3]

Rory: [00:03:26] going to be the same answer. And I suppose we'll get into this in a little bit. But when you look at these key indices around the world that the S&P 500 or the ASX, S&P, ASX 200, I think they provide really good tools for investors to be able to build portfolios. And I think when you look out five, 10, 15, 20 years, that's extremely valuable to investors over time. So, yeah, that's kind of starting to go into my investment philosophy. But yeah, I think I think these benchmarks around the world have done incredible things for investors. [00:03:59][33.3]

Alec: [00:04:00] Yeah, definitely. Now, obviously, we're in the midst of covid-19 and we've seen an unprecedented whatever it takes. The response from the US Federal Reserve, overrated or underrated, that policy response? [00:04:12][11.9]

Rory: [00:04:14] It's a good question. Well, the markets certainly loved it, hasn't it? So probably fairly valued. Listen, I'm going to go with underrated here. I think, you know, reserve banks all around the world have navigated as the word is, unprecedented events very well. They've given investors confidence. They've given companies confidence. So I think around the world, they've done a very good job. So underrated for my mind. [00:04:41][26.6]

Alec: [00:04:42] Not only have they given investors confidence, they may have given Tesla investors too much confidence [00:04:47][5.0]

Rory: [00:04:47] in myself in terms of performance, overrated [00:04:50][3.0]

Bryce: [00:04:51] or underrated Bitcoin [00:04:52][1.2]

Rory: [00:04:53] or overrated, not a Bitcoin believer. Oh, well, to be honest, I and I think it comes down to investing what you know, and I don't know much about it. [00:05:03][10.1]

Bryce: [00:05:04] So as senior manager of investment products at the ASX, I assume then there will be no cryptocurrency exchange supported by the ASX? [00:05:12][8.2]

Rory: [00:05:13] No, that's not right. [00:05:15][1.9]

Rory: [00:05:15] Oh, yes. [00:05:17][1.7]

Alec: [00:05:18] Chicago is not a futures market. You could do this. [00:05:21][2.6]

Rory: [00:05:21] No separating. And I suppose my my personal attitudes towards Bitcoin to my corporate life. Yes. You know, I think ASX plays a really important role and a gatekeeper to some extent in terms of the product that submitted to the exchange. And that is a very important role given that the number of retail investors and institutional investors that that to invest via the exchange. But having said that, we are still a marketplace and we do believe that actually investors are better placed to to make decisions on where they put their money. So we focus on things like quality, disclosure and robustness of of the way in which a product or a company operates. So the more the regulatory environment [00:06:05][44.0]

Alec: [00:06:07] like to, say, the Bitcoin futures market in [00:06:09][1.8]

Rory: [00:06:09] Australia. All right. [00:06:11][2.3]

Alec: [00:06:11] Well, another alternative asset that has done very well recently has been gold. So overrated or underrated gold [00:06:17][6.3]

Rory: [00:06:18] or so there's one of my team-mates. We always have this debate. He loves gold. He's a buyer of gold. I'm a seller. I'm over. Got it right from the I suppose, the Warren Buffett School, if you like, I just think when I retire, what is gold going to give me? It's not going to generate an income for me. Why do I why do I need it? I know there's lots of arguments on the other side of it, but I'm staying with overrated. [00:06:43][25.0]

Alec: [00:06:44] Warren Buffett noted for just buying a gold mine recently. [00:06:48][3.7]

Rory: [00:06:48] So I think gold miners, different story to to be honest, they're producing a product there. But just the physical asset. Different story for my mind. Yep. [00:06:57][9.4]

Bryce: [00:06:58] Fair enough. So overrated or underrated? Some of the hottest stocks on the ASX at the moment, the wax stocks. So you wise to APEN Afterpay zero and Altium overrated or underrated. [00:07:10][12.6]

Rory: [00:07:11] You're going to get me fired by trying. You'd hate to be a buyer at these levels, but you would also hate to be a seller. So it's got to be a hold. I'm a big lover of tech for my clients at ASX. I also worked in the IPO team talking to companies about listing on ASX and part of that strategy is talking to technology companies about listing on ASX and accessing Australia's capital markets. It's a very exciting space overall. I think tech stocks from perhaps a broader array of tech stocks, a total portfolio underrated. But for these particular names, let's say hold, [00:07:52][41.2]

Alec: [00:07:54] hopefully we can get some more Australian tech companies listed on the ASX and then maybe the heat will come out of a few, like the concentrated few that we we seem to be investing in at the moment. [00:08:04][10.1]

Rory: [00:08:04] It's a really interesting space. I mean, I think the supply, if I can use that word, of technology companies coming through Australian grown is ever increasing. I remember five years ago there was lots of, I suppose, junior technology companies, but they've been growing up over the last five years. And I think there's a number that would be able to to hit the boards, as it were. And also, we're seeing an increase in technology companies from overseas listing on ASX because of the way in which our market is structured. So I think we've got the hopefully the best of both worlds there. [00:08:40][35.3]

Alec: [00:08:40] Yeah, yeah. Now, last one to close out this game. We Australians are obviously known for their love of property. So overrated or underrated Australian residential property, [00:08:50][10.1]

Rory: [00:08:51] pure investors [00:08:51][0.4]

Alec: [00:08:52] point of view. If your investors [00:08:53][0.8]

Rory: [00:08:54] overrated. [00:08:54][0.0]

Alec: [00:08:55] I think that's the ASX party line. [00:08:57][1.6]

Rory: [00:08:59] You know, [00:08:59][0.1]

Rory: [00:08:59] I don't even need to elaborate on that. We're talking about was an Khwaja before. I think he did an incredible job of explaining why it's overrated. [00:09:06][6.7]

Alec: [00:09:07] I love that call back to an old episode. If you haven't listened to that episode, pause. Go and listen to the Ousman episode, then come back to this on. [00:09:14][7.1]

Bryce: [00:09:15] Now, Rory, we love to understand a bit about the background of our guests, and we always start with the story of their first investment. So are you able to share yours and perhaps any major lessons that you've learnt from it? [00:09:27][11.9]

Rory: [00:09:27] Yeah. So my first investment was probably like many Australians was through privatisations in the nineties. So through that mine was the Telstra float. I was probably 14 at that age, took a couple of shares. And so that was my first investment and exposure to owning a publicly listed company. After that, I probably rolled a little bit of money into some highly speculative, as we know, medical device companies and blew it all up. So that was probably my first introduction to investing. [00:10:01][33.3]

Bryce: [00:10:01] Yeah, nice to still hold the Telstra stocks. [00:10:03][1.8]

Rory: [00:10:03] I do actually [00:10:04][0.6]

Rory: [00:10:05] not stock [00:10:07][2.1]

Alec: [00:10:09] from those first Telstra shares to now. Have you developed a personal investing philosophy? [00:10:13][4.6]

Rory: [00:10:14] I have. And I mean, it's taken time for sure for me to develop a personal investing philosophy. And and I work in the industry as well. So I'm quite fortunate that I get access to, I suppose, a range of professionals across varying investment strategies, investment beliefs, investment philosophies that I can learn often and and mould around myself and my own beliefs. So, yeah, in terms of my approach that I take with my superannuation or my personal investments outside of super, to be honest, it's not too dissimilar to to the portfolio that Equity Mates holds. So it's that core satellite approach. I'm a strong believer for that core portfolio. That's what should be focussed on achieving your goals. So if it's a retirement goal, if it's a goal around saving for a car or a holiday or paying down debt or whatever it might be, and I believe that that core portfolio should be simple. I think keep it simple as the rule or that's the rule I try to apply anyway. So that means index low fees diversified across key asset classes. Don't try to time the market invest regularly. Yeah, I try to apply that philosophy. Outside of that core portfolio, so the satellite, I think that's where you can have a bit of fun investing doesn't have to always be too serious. And there's there's that there's lots of opportunities for you to play out your own personal interests or try to beat the market. And I don't think there's anything wrong with that. As long as you approach it in a, I suppose, a sensible way and you recognise that that there are risks. So for that satellite, if you're interested in particular themes, be that technology or health care or certain stocks in a sector that you work in. Yeah, go for it, I think. [00:12:00][105.9]

Alec: [00:12:01] And I read one of the reasons that we've got you on now is the ASX has just released their 2020 Australian Investor Study, Australian Investor Survey. There's heaps of data in there. We were just talking before we started, just the amount of insight that you can gather from it. So people listening want to know about who else is investing in Australia. And some of the attitudes is definitely worth checking out. We're keen to unpack a few of the different elements of it. But I guess just to start with, for people who haven't come across the study before. Can you tell us, you know, what it is and how often you do it and some some of those key details? [00:12:40][39.7]

Rory: [00:12:41] Yeah, absolutely. No problem. Yeah, you're right. There's a lot of information in there. A shout out to Investment Trends, which is a research group that we partner with to put their research together. They're specialists in this area. And I think they've done an incredible job, along with the other colleagues at the ASX to put the report together on the Web page and infographics that you see on there. But the ASX investor study is something that ASX has been doing for almost 30 years now, actually just over 30 years. And essentially it's a survey of Australian investors. And how it started out was ASX and back in the late 80s, wanted to get an understanding of how many Australians were holding shares and then also to understand how ASX and now participants, our brokers, could better service investors in Australia, be that via education programmes or better access to tools or through the late 90s or early 2000s online trading. So it was really to get an insight into what investors were holding and what they're doing. It started out as the share ownership survey, but over the last couple of additions, we've actually expanded the range of products that we now cover in the study. So obviously shares is a key and important product set, if I can call it that. But we've also extended to exchange traded funds, unlisted managed funds, hybrid's warrants, et etc., cetera. [00:14:06][85.3]

Bryce: [00:14:07] Yeah, nice. So I guess the big question is now you mentioned there it was originally to find out how many people were investing. What is the answer to that 2020? [00:14:15][8.0]

Rory: [00:14:16] Yeah. I mean, how [00:14:17][1.8]

Bryce: [00:14:18] many people are in the market asking for a friend who runs a podcast business interested in. [00:14:22][4.3]

Rory: [00:14:25] Yeah. So this is [00:14:26][0.9]

Rory: [00:14:26] where we get into the numbers. So there's nineteen point four million adults in Australia. Nine million of them hold investments outside of their superannuation and primary dwelling. Now, of those Australians, six point six million or 35 per cent of Australians hold products that are listed on the stock market. So the majority of that is obviously going to be in direct equities. But increasingly, as we'll touch on, that also includes products like ETF. Yeah, yeah. So six point six million is the pretty sizeable, pretty sizeable. [00:14:57][31.6]

Alec: [00:14:58] It's got less than half of Australian adults. So it makes [00:15:02][3.9]

Rory: [00:15:02] it unique opportunity, a big opportunity. [00:15:05][2.7]

Rory: [00:15:06] The trend has been really interesting over time. I mean, as as I mentioned, I bought my shares via privatisation and as did many Australians. So back in the late 80s, share ownership was at nine percent. And through the period of the 90s and the early 2000s when online trading took off, that's where the percentage increase really expanded and it has rested around that 35 per cent of Australian. [00:15:29][23.5]

Bryce: [00:15:29] Do you know where that sits? Relative to other countries? [00:15:32][2.7]

Rory: [00:15:33] Yeah. So it's roughly in line with what we see in the UK and the US, which are fairly good. Fairly good bet. Yeah. I suppose Australia has always been known to be as a percentage of the population, quite high in terms of our participation in the market. [00:15:48][15.0]

Alec: [00:15:49] That trend that you were talking about really surprised me. There was a chart on the website where it tracked all the privatisations and the increase, but then it really sort of peaked in 2004 and has sort of TIROS stayed pretty stable from there. And you think about what's happened from 2004 to 2020 and like the rise of online brokerage and lower cost brokerage and all of these companies trying to make markets more accessible, and yet the percentage of Australians holding shares has remained stable. That was really surprising to me. You know? [00:16:21][31.5]

Rory: [00:16:21] Well, the short answer is no, unfortunately. Oh, listen, I think let's look at our sample for the study, we're looking at those assets that are held outside of superannuation. So it's, you know, held usually in a personal name or a joint name, but it does include self managed super funds. One area that I'm really interested in is that superannuation money that's not as himself. So, you know, if I've got it in a retail fund or in a in an industry fund, I think that's a really interesting place because I think the self directed options are self directed. Investment managers are getting a lot better via those providers. Even I use one of those options self directed for my superannuation and I hold 8000 shares through that. So I wouldn't actually come up in the statistics on here. [00:17:14][53.4]

Bryce: [00:17:15] Yeah, right. So how has the investor landscape changed since, I guess you last did the survey and I guess we could then start digging into some of the key trends that you're seeing. [00:17:25][10.6]

Rory: [00:17:26] Yeah. So I'll probably answer that question and also some of the key trends in that. I think there's two things that really stand out in terms of the investor landscape. One is around the next generation investors and the other is around female investors. So on next generation investors, which I assume is a core demographic for for yourselves, we've targeted or defined next generation investors as 18 to 24 year olds. [00:17:53][26.6]

Alec: [00:17:54] We just missed that category. [00:17:55][1.3]

Rory: [00:17:57] Yeah, yeah, yeah. [00:17:58][0.6]

Rory: [00:18:00] And about nine per cent of investors, next generation investor. So there's 800000 of them out there in Australia and about 25 per cent of new investors in the last 12 months were next generation investors. So that makes them one of the fastest growing segments in Australia, which I think is extremely interesting. What's also interesting about, I suppose, this segment of investors is what they're investing in. So they are more likely to invest in ETFs than other age demographics. And they're also actually more likely to invest in international shares than other age demographics. And I think taking the international shares element first is it's an old adage of investing. You invest in what you know, and these days you wake up and you've got an Apple iPhone next to you. You just search on Google, I turn on Netflix, etc., etc. These are the names that now next generation investors grew up with and now as opposed to ABC Australian Incorporated Company. So I think that's a really interesting trend. And then ETFs as well, the growth in ETFs in Australia but also globally, just enable investors to get easy access to broad range markets or even investment themes that that might be very interesting to talk to those types of investors. [00:19:17][76.7]

Alec: [00:19:18] So you said there were two key categories there. We just touched on young investors. The other key category was female investors. What were some of the insights that you found around female investors? [00:19:28][10.0]

Rory: [00:19:29] Yeah, so I think the first one is not a good story. Actually, it's quite unfortunate to see that female investors are very underrepresented in the investor population. So we found that about 42 per cent of current investors are female investors. But obviously we would want that to be up that 50 percent. But on the positive side, there's about 45 per cent of those who began investing in the last 12 months were female, which is up from 31 per cent amongst those who started investing five to 10 years ago. So this growing wave of female investors starting to starting to enter to the market, which I think is extremely positive. The other positive thing there is that female investors account for 51 per cent of intending investors. So those investors that over the next 12 to 24 months want to invest. So I think that's a really positive trend in the marketplace. Some things just to touch on in relation to female investors. Research has suggested that there's still a lot more work to be done to help. I think females participate in the market to the same degree as what men do. Some of the research I've got some points here that typically females hold fewer assets, they're less diversified, they're more risk averse, and they're typically less aware of the range of investment options that are available to them. The research also showed female investors need a larger range of information, sources and knowledge before they feel comfortable to make an investment decision. This is probably not going to surprise anyone. But as an example, if men needed to know three out of 10 things before they were comfortable to invest, a female investor would need to know seven out of 10 things before she would feel comfortable to invest. But there is one really positive thing as well that came through, which is that female investors tend to prefer to set a well considered strategy and then stick to it. And I think that that's a really positive thing because that's actually investment best practise. Right. And so I. That knowledge gathering they undertake sets them up really well going into the future. [00:21:31][122.5]

Bryce: [00:21:32] Yeah, nice. So what are some of the main reasons that people are saying they're investing? You mentioned sort of before you set goals to three based on your core portfolio, but I'd be interested to know what the survey is saying as some of the key reasons that people are actually putting money into the market. [00:21:48][16.4]

Rory: [00:21:49] Yeah, so there's kind of two core things that that happen there that comes out in the research. Unsurprisingly, it's to build a sustainable income stream that's very prevalent across all age demographics. And then obviously with next generation wealth accumulator investors, it's it's about maximising capital growth. But we did ask a question around what financial milestones are you working towards over the next three years as well? The number one answer there was to go on a holiday. So that won't be [00:22:18][29.1]

Rory: [00:22:21] three, three years. Yeah, three years work, but maybe not the next 18 months. [00:22:26][4.8]

Rory: [00:22:27] The second one, actually, because they won't be able to do the first one or will help them with number two and three, which is to pay down debt or become debt free. And then the third one was to to get their finances or their budget in order. Those are the kind of top goals for investors. [00:22:41][14.1]

Alec: [00:24:34] I do love that question. Like, what's the main reason you invest? It's to make more money. [00:24:39][4.9]

Rory: [00:24:40] What's not to go on holidays? [00:24:40][0.8]

Alec: [00:24:41] Yeah, but, you know, to make money. To go on holidays, you know. Yeah. [00:24:45][3.5]

Bryce: [00:24:45] I don't know. I've personally never put money in the market to make money thinking that it be so I can go on holiday and you know, unless it's retirement or. Yeah. You know what I mean. But I'm not like ah I'm going to, I don't know, usually in a year I'm going to invest in Amazon and that's how I'm going to get there. You know, I just find that it's personal, personal opinion. I don't know. Do you you don't want to go on holiday. [00:25:07][22.4]

Rory: [00:25:08] I'm not. Yeah. [00:25:08][0.4]

Alec: [00:25:09] I was going to say I don't have the you just have the financial backing that you don't need to invest to go on holiday, [00:25:14][4.7]

Rory: [00:25:14] you know, which I'm not sure this is not true. So you haven't answered the question, though. [00:25:23][8.7]

Alec: [00:25:23] Have I invest it to go on holidays? Yeah. Yeah. I mean, the whole thing that we talk about is a lot more longer term. Yeah. [00:25:29][6.0]

Bryce: [00:25:30] Yeah, yeah. So yeah, I'm, I'm interested in the mindset of people or investing then to pay down debt as it go. That kind of to me is like you should just [00:25:38][8.2]

Rory: [00:25:39] let me let me ask you then if ASX was the survey so. [00:25:42][3.3]

Bryce: [00:25:43] Yeah. Well we didn't get the survey. [00:25:44][1.4]

Rory: [00:25:45] So you didn't need all investors. [00:25:47][1.9]

Rory: [00:25:48] What's your main goal when investing over the next three years. [00:25:51][2.5]

Bryce: [00:25:52] Three years. My main investing goal over the next three, [00:25:55][2.9]

Rory: [00:25:55] this is why they didn't ask you is to [00:25:57][2.1]

Bryce: [00:25:58] wealth accumulation, let's put it that way. Yeah. I'm not intending to take anything out of what I put in over the next three years. Yeah, I just want to build that as quickly as I can. And if I had to put a number on it to set the goal, that's what I would do. Maybe, I don't know, two times what I've got in now. Three times, I don't know. But yeah, it's definitely not a material goal. [00:26:18][20.0]

Rory: [00:26:19] Yeah. And I think it pointed out something that's really important there, which is time frame. We do break things down into time frames when it comes to investing. Because obviously, you need to take account of the risk that's associated with your particular investment, so if you're investing in 100 percent equities for a goal that you've got two or three years away, you should probably rethink that. [00:26:40][21.5]

Alec: [00:26:41] Yeah, that was my biggest thing with the three years. It's like you may not be going on the holiday if a GFC happens. Yeah, exactly. [00:26:48][7.3]

Bryce: [00:26:49] Yeah. Or you might be paying a lot of interest on your debt if you're waiting to get get some money to then pay it off. [00:26:54][5.3]

Rory: [00:26:55] So I think we're going to challenge the ASX on the question in this case, I [00:27:00][4.9]

Rory: [00:27:01] suppose you're making an assumption there that the investment is in equities, right. There's a range of asset classes that you can invest in and technicality. [00:27:08][7.1]

Rory: [00:27:09] Yes. [00:27:09][0.0]

Alec: [00:27:11] And that's why we're interviewing you right now. [00:27:13][2.7]

Rory: [00:27:14] I mean, [00:27:14][0.1]

Rory: [00:27:14] you could pick a conservative fund that would be an investment and that would be more suited to a shorter timeframe goal. [00:27:21][6.5]

Alec: [00:27:22] Yeah, obviously, covid has come and smacked everyone in the face and the markets are fast drop and then an incredibly quick recovery. Actually, I guess for context, when were the surveys done? Like we're in that covid fall and then recovery? [00:27:38][16.4]

Rory: [00:27:39] Were those done? It's a really good point. I and I failed to mention it at the start. One of the really interesting things about this study is that we first went to market with the study in January of 2020 and then obviously Covid happened. So we were sitting there having had collected a number of the responses, like a material, a material amount, that we would have been able to wrap up the survey and obviously covid had happened. So as a team, we sat there and said, well, actually what we should be doing is going back out to investors and trying to understand the differences in attitudes towards investment or risk or diversification now that Covid is happening. So we did a small second survey in May of twenty twenty. [00:28:22][42.7]

Alec: [00:28:22] I guess in some ways that's kind of perfect though, because you have a great before and after sample size to compare. So with those two sample sizes and looking at the impact that Covid had, what were some of the main things that you saw in the numbers? [00:28:37][14.9]

Rory: [00:28:38] One of the things that stood out was how people made changes to their portfolio. So did they or did they not make changes to their portfolio? And 54 percent of people did make changes to their portfolio due to Covid or during Covid. Interestingly, those with financial advisors and younger investors were more likely to have made changes to their portfolio. Those particular investment categories, 17 percent invested all of their spare money during or after covid, and then 17 per cent increase their allocation to Australian shares. [00:29:10][32.5]

Alec: [00:29:11] I like that correlation between those with financial advisers and young investors. It shows that young investors are obviously learning, you know, from something that they're making the same decisions in aggregate that financial advisors are [00:29:26][14.5]

Bryce: [00:29:26] all financial advisors and making the wrong decisions. [00:29:28][1.6]

Rory: [00:29:30] Now, that is a controversial point. You said it not. But yeah, [00:29:33][2.9]

Rory: [00:29:34] it's a really controversial point, actually, because the research showed that a large majority of those advised investors were very happy with the advice that they had received during that period. And they relied on their advisor during that period either to to stop them from making certain investment decisions or to encourage them to invest back into the market and take on more risk. [00:29:57][22.9]

Alec: [00:29:58] I mean, you would be extremely happy if you were convinced in March to put money in by your adviser and then you saw what happened afterwards. [00:30:04][6.4]

Rory: [00:30:05] Yeah, yeah. [00:30:06][1.1]

Bryce: [00:30:07] And before we move into a bit more on the ASX itself, how does your team sort of see the investor landscape changing over the next sort of five year period? [00:30:18][10.4]

Rory: [00:30:19] Yeah. So in terms of the investor landscape, there's a couple of things that come to mind there. I've already kind of touched on two of them. But just to really emphasise that I think female investors, I think is a clear trend. I mean, even in our day to day job, we see a number of groups now, be they financial advice groups or education groups or event groups that are focussed on increasing education to females in Australia. So I think that's a positive thing, and I hope that that can increase the female participation rate. I think that younger demographic as well, even if we expand the range, you know, not 18 to 24, but expand that up to to 30. I think that's a really interesting space in Australia. I think given the way that digital or online is moving, younger investors are just going to, over time, have access to more tools. They're going to have access to robo advice or micro investing that enables them to get access to the market in a safer, wiser way. I think there's still a lot of work that needs to be done in Australia in relation to a. Bryce and to bringing down the cost of advice and making advice scalable, that's probably a whole other discussion. And the last piece for us that we spent a bit of time thinking about is retirees. I don't think there's been that much product innovation in relation to product for retirees in Australia. But obviously we've got a huge number of baby boomers that are going to be retiring over the next five to 10 years. So I think on a longer term horizon, that's going to be a really interesting space to watch as well. [00:31:57][97.8]

Alec: [00:31:57] Yeah, you had in the numbers there was two point six million Australians that were lapsed investors and the I'm not sure if it was the majority, but a large proportion of those people were retirees. So I assume that they've moved from the accumulation phase to the spending phase of their life. Yes, that's only going to accelerate, you know, in the coming years and decades. I guess, you know, there'll be young people that are adding to their super, but there'll be a big proportion of the population selling their assets. Do you guys think about that at the ASX and what that could mean? [00:32:31][33.2]

Rory: [00:32:31] We're not as close to that in terms of how does that actually happen and what are the I suppose, the considerations for from an investor's point of view, it's that that whole transition to retirement or I suppose wealth shifting, if you like, transition of wealth from retirees through to children is is another, I suppose, that sits in financial advice. But what we do think about is the range of product that is available on ASX. So, you know, self managed super funds are a really interesting cohort of investors. Right. And we're thinking about, OK, so if you're a self managed super fund that's entering into retirement now, how would you build a portfolio using the products that's available on ASX? [00:33:18][46.7]

Alec: [00:33:19] One other question. If we go from the retirement end of the market to the complete opposite end of the market, obviously this only looked at investing adults. But I think a trend that we're seeing, especially in America, but I'm sure it will be playing out in Australia as well, is teenagers and young people getting in the market and, you know, the rise of the tik-tok investor and all of that is definitely a trend that is happening. Do you guys think you'll ever broaden the data, set out and talk to sort of teenagers and capture their views on investing in their participation rate as well? [00:33:53][34.1]

Rory: [00:33:53] It's a really interesting concept, actually. I have to take that back to the well, [00:33:57][4.3]

Alec: [00:33:58] that's actually Equity Mates Kotero. [00:33:59][1.3]

Rory: [00:34:00] So it is a relatively difficult one to to track, though, isn't it? I mean, I've got two young kids. I've got a two year old daughter and a one year old son. And so I've got them set up with brokerage accounts, but it's all in my name and they're as trustees and etc, etc. So it's it's not the easiest group to be able to measure. [00:34:19][19.4]

Alec: [00:34:20] Yeah, yeah. The stories of Robin Hood investors, you know, like kids at school trading, you know, hurts and stuff during Covid. [00:34:27][6.9]

Rory: [00:34:27] It's just like, well, I saw Rory. [00:34:30][3.2]

Bryce: [00:34:31] Before we jump to our final three questions that we always ask our guests, we'd love to just understand a bit more about the ASX. And given you're in charge of product over there, what are some of the new products that you're seeing being produced for retail investors on the ASX? And what can we kind of expect to see other than a crypto exchange? [00:34:50][19.4]

Alec: [00:34:51] And if you want to if you want to break news on the podcast and tell us a new product that we can expect that no one else knows about, that would be great. [00:34:58][7.1]

Rory: [00:35:00] Obviously, I've listened to a number of your podcasts and I recognise a number of the speakers in terms of from a product, if you're a farm manager perspective, it's not going to be too dissimilar to to what they've already talked about. So I think increasingly we're going to see more NASCH exchange traded funds that have brought to market, enabling investors to play to key themes, as I said earlier, be that technology or high growth or robotics, I cyber security, et cetera, et cetera. And so I think that's it. That's a positive thing. I think we'll see more around that whole retirement space. We'll see more income products, more yield products. I mean, there's already a lot of that at the moment. So I think there's really good range. I mean, there's 240 ETFs, there's 230 M funds. There's just over one hundred and eleven listed investment companies and trusts. So, you know, there's quite a range product set there, but we constantly have product issuers coming up with new innovative products. So I think that's a positive thing. [00:36:03][63.0]

Bryce: [00:36:03] When will we see the end of the minimum? Five hundred dollar parcel? [00:36:06][2.8]

Rory: [00:36:07] Yeah, well [00:36:07][0.5]

Rory: [00:36:09] well, CommSec actually did achieve that through the pocket their pocket app. Yeah. It takes a little bit of manipulation behind the scenes to make that work. So they made it work. It is expensive though. So there's a bit of a trade off there between the minimum investment size versus as far as. The cost to do it and also the cost to service that from a either a fund manager point of view or even a listed company point of view, if you're a listed company and you've got thousands of shareholders all holding two hundred dollar, 100 dollar share lots, it becomes very attractive quickly. Yeah. [00:36:44][34.9]

Alec: [00:36:44] I want to ask a question that you may not be able to answer without that. [00:36:48][3.4]

Rory: [00:36:48] Sounds like you probably won't be able to answer it [00:36:50][1.8]

Alec: [00:36:50] without naming any names or throwing anyone under the bus. I'm sure a lot of different product ideas come across your desk and a lot of them get rejected. Can you tell me the worst product idea you've ever seen come across your desk? [00:37:03][13.1]

Rory: [00:37:03] Not off the top of my head? [00:37:04][1.0]

Rory: [00:37:05] Yes. [00:37:05][0.0]

Rory: [00:37:06] In short, no. I mean, a lot of that is obviously done confidentially, to be honest, from fund managers that bring products to ASX. Very few are wild and wacky ideas. To be honest, I think we're actually quite lucky in Australia. We I think we have the right balance between access to choice and innovative products without going down a slippery slope, if you like. [00:37:30][23.2]

Alec: [00:37:30] I was just trying to figure out where the benchmark was because Bryce has some shocking ideas that he's been pitching in. One way you might bring one or two to your desk at some point. [00:37:39][8.5]

Rory: [00:37:40] Final three. [00:37:40][0.3]

Alec: [00:37:42] All right. Well, on that note, we want to say a big thank you for coming on. Rori, if people want to check out the study themselves, they can go to the ASX website and download it there. If people want to follow you or, you know, say more what the ASX is putting out. Is there any particular social media or any particular website where they should be going? Yeah. [00:38:04][21.7]

Rory: [00:38:04] So ASX has a Twitter handle ASX and you can find the ASX website, ASX dot com that you just a bit of a promo for that website will actually be launching a new website in October as well. So if you like your websites, if you like them to be slick, then just wait till October because it's it's a good looking website. Our current one is definitely not up to scratch for the 21st century. So we're looking forward to that coming up as well. Right. [00:38:32][28.4]

Alec: [00:38:33] That's one we do like. And these interviews with the same final three questions. So we'll get stuck into those. First one is, do you have any books that you consider a must read? [00:38:42][9.3]

Rory: [00:38:43] Okay, so one for beginner investors, it's very hard to go past barefoot investor. I think there's a lot of really good points in that book and it's it's really well tailored. If you're a beginner investor out there and you're wondering what all the jargon means and how to structure your investment philosophy, I think there's lots of good points out there. The types of books I prefer reading, I suppose not quite investing books are more related to business and how to grow businesses or bad business stories. So one that I really love is zero to one by Peter Thiel. I think that's that's a great book. And for anyone that follows the technology sector, I think that's a really good read. One on bad business is is bad blood about there? And I think that's true. That's an unbelievable story. And again, you know, for anyone interested in in technology or medical devices, you've got to read both the positive and negative news. Right. And it's incredible how that business got funded for so long. It just goes to show what can happen out there. [00:39:45][62.3]

Alec: [00:39:45] Yeah, incredible that it got so much funding and also it got funding from very sophisticated investors. Yes. [00:39:51][5.8]

Rory: [00:39:52] Yeah, absolutely. So they all can make mistakes, right? Yeah. Yeah. I really like those those last two books in particular. [00:39:58][5.8]

Alec: [00:39:58] Yeah. Nice. The second question is, what's your go to source for investing and financial information. [00:40:03][5.3]

Rory: [00:40:04] ASX Dotcom. [00:40:05][0.7]

Rory: [00:40:06] Yeah that is actually one. [00:40:08][2.5]

Rory: [00:40:08] We have an investor update newsletter regularly have contributors to that. I actually quite like reading it as well. Sorry to keep on on the tech theme. I just try and find something different. [00:40:17][8.9]

Alec: [00:40:18] Perhaps we really don't have to apologise about taking on the tech thing. We've done it for four years. [00:40:22][4.4]

Rory: [00:40:23] CB Insights as a daily newsletter for anyone that wants to understand, I suppose, tech things that are occurring around the world and where venture capital funding different themes across a range of industries. I really like the work and the analysis that CB insights, the nice one. [00:40:41][17.7]

Alec: [00:40:41] And then final question. If you think back to your younger self participating in Telstra's privatisation and getting your first shares, then what advice would you have for your younger self? [00:40:53][11.1]

Rory: [00:40:53] Buy Berkshire Hathaway? [00:40:54][0.8]

Rory: [00:40:54] Yeah, I said yeah, yeah, yeah. I was on Apple. Berkshire. Yeah. [00:41:00][5.2]

Rory: [00:41:01] Listen, it's probably the same advice I would give to my kids, you know, start small, start early and and continue to reinvest. And if you do that and keep it simple, I think you'll end up okay in the long run. [00:41:13][12.0]

Bryce: [00:41:14] Nice. Nice story. Well, thanks for joining us. It's been an enjoyable conversation, understanding a little bit more about what's going on in the investor landscape out in Australia. I'm looking forward to the next edition. We'll hit you up. Offline, we've got some questions that we could use for our own market research, [00:41:29][15.6]

Rory: [00:41:30] but we'll [00:41:31][1.2]

Bryce: [00:41:32] talk about that later. So, again, thanks for joining. It's been a lot of fun and looking forward to keeping in touch. [00:41:36][4.6]

Rory: [00:41:37] No worries. Thanks, guys. Thanks for having me. [00:41:38][1.6]

Speaker 5: [00:41:39] Thanks for listening to Equity Mates investing podcast production of Equity Mates Media. Please remember that everything you hear in Equity Mates investing podcast is general advice on the content has been prepared without knowing the personal objectives, specific financial circumstances or goals. The host of Equity Mates investment podcast may maintain positions in the companies discussed before considering any investment. Please read the product disclosure statement and consider speaking to a licenced financial professional. [00:42:03][24.4]

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