Consumer trust isn’t something to be taken for granted, but reports from the UK, US and here at home are all pointing towards an uplift in trust levels around financial advice, which can only be a welcome development.
There are significant tailwinds behind the financial advice industry at the moment, but some major obstacles are still preventing advice practices from taking advantage of surging demand according to a new study from CFS.
‘Green’ trading evident in broker volumes
AUSIEX, one of Australia’s leading wholesale brokerage firms, this week highlighted the growing popularity of ESG and sustainable investment trades. Having executed some $55 billion of transactions in the financial year to date, the group is in a unique position to understand how and who is “putting their money to work” in line with their values.
According to a recent media release, the trading value in equities and ETFs associated with hydrogen, battery tech and clean technology has increased 134 per cent since 1 January 2019, with investors “pouring” into new green sectors. During the first five months of 2022 trading value in these securities has nearly reached the same level as all of 2019.
AUSIEX CEO Eric Blewitt said that while trading volume was highest in November 2021, around the time of COP 26 in Glasgow, strong momentum continues. “2021 was the biggest year thus far with nearly $3 billion worth of trades in ESG-related securities – this was more than a $1 billion increase on 2020.”
According to Blewitt, younger generations are more likely to utilise ETFs with ESG and sustainability screens or marketing when they invest, while older investors were more likely to invest directly into ASX-listed companies in the relevant sectors, for better or worse.
“Hydrogen investments are the most popular green sector across all generations of investors and represent around 80% of all ESG-related trades placed between 2019 and now,” Blewitt explained. The research pointed to this being the focus of Government policy in 2020 as a key reason for the popularity.
While in 2021, “trading in battery and clean tech securities began to outstrip trading in broader sustainability-themed securities”. This news comes after a swift selloff this week on pricing concerns in the global lithium market.
The trend was shared by local sustainability manager, Perennial Better Future, with portfolio manager Damien Cottier saying: “We have seen increasing volumes in our Better Future companies, particularly the likes of companies like Calix (ASX:CXL), whose business is solving a sustainability challenge.”
Expanding, he says, “we have continued to see an incremental increase in inflows and trading volumes within our sustainable ETF, IMPQ. This is a broad representation of the ESG and Sustainable Investment market, where sustainable funds have attracted significant inflows resulting in increased trading in their underlying companies.”
It seems clear that more and more people are seeking to align their capital to their values, something highlighted by the recent election result.
