Investors in Queensland are Australia’s risk takers when it comes to investing, according to Aviva Research.
Investors in Queensland are Australia’s risk takers when it comes to investing, according to Aviva Research.
The risk investment profile of each state was determined by the inflows to the Navigator platform. This was joined with an age based demographic breakdown to determine any influence upon fund flows and risk profile.
Aviva Research manager, Stuart Fechner said a consistent portfolio mix, one commonly aligned with a "growth" investor, existed across NSW, VIC, SA and WA. And, QLD held a "high growth" profile with an 81% allocation to growth assets.
Asset Allocation & Risk Profiling[1]
|
| QLD | NSW | VIC | SA | WA |
| 1. International equity | 23% | 21% | 23% | 27% | 20% |
| 2. Australian equity | 46% | 36% | 40% | 35% | 38% |
| 3. Property | 12% | 16% | 12% | 12% | 16% |
| 4. Fixed interest | 18% | 25% | 19% | 25% | 22% |
| 5. Cash | 1% | 2% | 6% | 1% | 4% |
| Growth assets | 81% | 73% | 75% | 74% | 74% |
| Defensive assets | 19% | 27% | 25% | 26% | 26% |
| Implied risk profile | High growth | Growth | Growth | Growth | Growth |
“The objective of breaking up overall fund flows into a state based breakdown was to provide an indication of the asset class mix and the implied risk profile for each state,” said Stuart.
It was important to couple the fund flow data with the age based demographic[2] of each state. Fund flows illustrate which state has the largest appetite for risk and the lowest, but this may be influenced by age demographics. Age and the timeframe to retirement is a key question asked by financial advisers in determining an appropriate investment portfolio and financial plan.
“Queensland was the youngest state with a median age of 35.9 years with 12% of its population over age 65. SA had the greatest proportion of its population over the age of 65 (15%) and the highest median age of 38.8 years,” Stuart added.
State Age Demographics
| QLD | NSW | VIC | SA | WA | |
| Over 65 | 12% | 14% | 14% | 15% | 12% |
| Under 65 | 88% | 86% | 86% | 85% | 88% |
| Median age | 35.9 | 36.8 | 36.8 | 38.8 | 36.2 |
“The Queensland age statistic is at odds with the portrayal of Queensland as Australia’s answer to Florida as a place many southern state retirees flock to. However it does assist in explaining the greater risk appetite,” commented Stuart.
When looking at fund flows to individual asset classes, globalisation of investment markets and global themes remain relevant.
“No country is immune from overseas influences and there is a clear preference for Australian equities over international equities even though a broader range of investment opportunities exists offshore,” said Stuart.
“This is not surprising for two main reasons. Firstly the strength in Australian equity returns over the last three years has attracted many investors (S&P/ASX All Ordinaries Accumulation Index returning 25.0%pa for the three years to 31 December 2006) and secondly the benefit of imputation credits from Australian equities helps investor returns on an after tax basis, something you don’t typically receive when investing in international equities,” said Stuart.
“In South Australian a much smaller difference (8%) exists between the investments allocation to Australian equities and international equities which is half the average 16% difference across the other states,” stated Stuart.
“Clearly the largest proportion of funds flow to Australian equities over international equities was seen from Queensland investors,” added Stuart.
The funds flows analysis only considered the five main asset classes and did not incorporate assessment of diversified funds.
“In looking at the funds flows into diversified funds, the most utilised fund type is diversified growth which received approximately four times the funds flow of the diversified income and diversified balanced funds,” said Stuart.
-ends-
[1] Fund flow data is for the 2005/2006 financial year.
[2] Age based demographic data was sourced Australian Bureau of Statistics data as at 30 June 2005.
Stuart Fechner is available for interview on 0407 839 080.
For further information please contact:
Tim Cobb
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