The Australian contract for difference and exchange-traded fund markets continued in its expansion this year as more and more investors are searching for much greater or at least more predictable returns that can be created by traditional equities.

Investors have been seemingly ensnared to these two very distinct products since they can see another means in lowering their cost while achieving similar returns in the case of ETFs, whereas with CFDs, they can feel that they can manufacture wealth through market volatility in stocks, commodities and currencies.

The growth in the ETF market has seen the number of ETF investors doubling since December of 2011.

While the growth in the CFD traders have been much slower at just 2 %, the Australian figures are in bleak contrast to many overseas countries where there were erratic falls in the number of participant in Singapore, Britain and France.

While such commodities are very different products, both can still fit within some investors portfolios and about 6,500 have placed their stake in both products.

Analysts from Recep Ill Peker compiled an investor statistics on the local ETF market for the Australian Financial Review which yielded 51 on the average household income OF 1.2-times the average Australian investor.

As compared with the average Australian investor, they have 1.3-times the amount of investable assets which are normally considered to be assets not including the family home.

Approximately 45 % have a self-managed super fund and the SMSF sector has been the main driver as well as the trustees which are responsible for receiving advice from financial planners or stockbrokers.

The SMSF trustees are being lured to what can be a low-fee environment in the ETFs which are comparable a simple transaction of products. The inclination from SMSF sector is for them to invest in an ETF and them they can closely watch how that performs overtime. If they are pleased with the results, they are free to drip feed more money.

There isn’t really too many day traders that are opting to be involved in ETFs. They are but not as big in part.
Institutional investors and the aligned financial planning market are expected to become more involved in ETFs in the next few years.

Classic CFD traders

The average CFD trader in Australia is a somewhat younger than those investing in ETFs. They number 45 and have a household income in line with the typical share investor. They are approximately 12 % less affluent than the average investor when it comes to investable assets about 48 % of CFD traders have an SMSF.

Australian CFD traders choose foreign exchange and local as well as international indices to trade. Those compromise an estimate 69 % of transactions.

However, FX trades are becoming less popular overseas in a sense that Singapore and the U.K. shares are becoming the preferred trade while in France and Germany indices predominate.

As with the ETF investors, there is a substantial level of involvement from many advisers. An estimates 48 % of CFD traders conferred with an adviser in the past 12 months to June this year and the number was much higher for ETF participants.

Trading on a mobile platform is really an appeal to many CFD traders, especially frequent traders who make more than 30 trades in a month in which a third of them use tablets and smart phones in monitoring their trades.

CFD traders usually have some exposure to the markets before they start to trade their respective products.

It is difficult to come to a conclusion because the CFD traders compose of a divers class of people but they usually have some experience with FX or investing then they move onto short-term trading.

CFD traders tend to have a solid foundation in their educational background in which most are male although some of the best and most active participants are surprisingly women.

Traders nowadays are better resourced than ever. Once they have sought assistance in all kinds of areas such as charting, but now so many tools are widely and readily available. Moreover, the CFD trader is much wiser and more knowledgeable than they were a couple of years back.

Last Updated: January 20th, 2021