How we invest: The companies and sectors that Australians love to buy and sell

Australian investors took most interest in the materials sector in 2023, with mining trades edging out bets on big banks across the ASX according to a report from broker platform Selfwealth.

While investors pinned their hopes on materials and financials across the country, the report revealed certain commonalities investors have across generations and demographics that guide their investment predilections. Proximity and exposure to sectors remains a significant determinant in investment, with people tending to invest in what they’re familiar with, and what they understand.

The popularity of financials and materials is solid across all generations, but thereafter things tend to follow the idiosyncratic traits of different age groups.

Older generations favour investment in healthcare, for example – a sector people naturally become more interested in as they age and come to rely on. Exactly 25 per cent of capital invested in healthcare came from the ‘baby boomer’ generation (currently 60 to 78 years old), while ‘Generation Z’ (currently 15 to 30 years old), only owns 7 per cent.

“SelfWealth’s baby boomer cohort over-index for health care shares,” the group’s 2023 Investor Report report (which collated investment data up until the end of 2023) states. “Their over-investing to the sector is the largest of any demographic and sector. Conversely, Gen Z invests less in health care than all others.”

Younger generations, unsurprisingly, have a penchant for the companies behind technology they grew up with and remain familiar with. About 8 per cent of Generation Z owns information technology shares, while only 3 per cent of the boomer generation does.

The prevalence of ownership in materials and financials was uniform across all states and generations, however. Materials, in particular, made up 42.7 per cent of all trades on the Selfwealth platform in the 2023 calender year, which was almost as much as the combined trade volume of the next five most traded sectors. “Trading activity was underpinned by strong interest in iron ore and lithium shares, and, to a lesser extent, gold and other mining shares,” the report noted, adding that Pilbara Minerals (7.6 per cent), Fortescue (5 per cent) and BHP (4.9 per cent) were the most traded companies in the sector.

Financials were the second most trades stocks in 2023, with trades involving ANZ (9.6 per cent), Westpac (9.6 per cent) and Macquarie (9.5 per cent) clear leaders for investors. “Six of the top ten most popular Selfwealth trades within the financials sector were bank shares,” the group noted. 

Interest in healthcare surged in 2023, with the sector’s representation growing from 6.6 per cent in 2022 to 8.1 per cent last year on the back of strong trading across companies such as CSL (13.8 per cent), ResMed (6.8 per cent) and Neuren Pharmaceuticals (6.1 per cent).  

Healthcare also provided the largest state-based anomaly across the sectors, with Victorians showing a clear preference for a sector the rest of the country largely abandoned. “Victoria was the main source of investment in XHJ shares,” the report states. “With an indexation 78 points above baseline, Victoria is beaten only by NT’s allocation for materials shares.”