CommSec announced brokerage fees on trades under $1,000 will halve from $10 to just $5.
- Barriers to investing continue to diminish as CommSec slash brokerage fees.
- Exchange Traded Funds are increasingly the investment of choice for Aussies.
- Fixed income ETFs made up of bonds attracted $1.74 billion in the first half 2023.
Previously, the platform charged a flat rate of $19.95 for trades between $1,000 to $10,000, but for trades between $1,000 and $3,000, this has dropped to $10.
This is still more than competitors: Stake charge $3 brokerage on trades below $30,000, while Superhero offer a flat $5 fee on most trades, and $0 brokerage on ETF purchases.
Patrick Bensted, a 24-year-old from Brisbane who began investing with CommSec three years ago, said it has been a great resource to help him get to grips with trading ASX shares and Exchange Traded Funds (ETFs).
"[CommSec is] extremely user friendly and accessible," he told Savings.com.au.
"The pocket app is a great tool if you want to get into trading with limited knowledge."
CommSec Pocket is a simplified version of the CommSec app, allowing users to trade with as little as $50 in seven themed ETFs.
ETFs the new darling of Aussie investors
Apps like CommSec and Stake are helping more young Australians get started with investing sooner, and it's increasingly ETFs they are opting for.
According to investment group Vanguard, 20% of all Australian investors now have a stake in some sort of ETF.
ETFs are a type of managed fund that owns assets that investors then buy units in, typically tied to certain sectors or indexes.
For example, Commsec Pocket investors can choose between the likes of the 'Emerging Markets' ETF, which focuses on companies based in fast growing economies like China and India, or the 'Sustainability Leaders', with shares in companies with minimal environmental impact.
ETFs are an attractive option because they spread exposure across different companies, allowing investors to spread risk and not have all their eggs in one basket.
The ASX 2023 Investor study called ETFs "one of the most affordable ways to enter the investment market and diversify holdings."
According to the ASX and Vanguard, fixed income ETFs, which give investors exposure to different types of bonds, attracted the most cash flow of any asset class in the first half of 2023.
Australian bond ETFs received $1.74 billion in the first half of 2023, up 54% on the same period in 2022.
Duncan Burns, head of investments for Vanguard Asia Pacific, said despite high interest rates (which typically lower bond prices), bonds can still benefit investors with a "sufficiently long term horizon".
"Investors are flocking to bonds in their search for diversification and income as yields continue to stabilise, a signal that investors are becoming more optimistic, presenting an attractive alternative to holding cash which has generally underperformed bonds post rate hike cycles," Mr Burns said.
ASIC going after 'greenwashing' funds
It's not all positive news for Aussie investors though, with ASIC announcing today it will be investigating Vanguard for misleading the public about the securities held in its 'Ethically Conscious' bond index fund.
Vanguard claims the fund excluded bonds issued by companies with significant business activities in certain industries, including fossil fuels.
ASIC however alleges almost 200 of the bonds in the fund were issued by investors with activities linked to oil and gas exploration.
ASIC Deputy Chair Sarah Court said with more investors seeking ethically conscious options, ASIC needs to ensure these 'screens' can be relied upon.
"We consider that the screening and research undertaken on behalf of Vanguard was far more limited than that being promised to investors, and we consider this constitutes another example of greenwashing," Ms Court said.
"Investing in 2023: CommSec lowers brokerage fees, ETFs more popular than ever" was originally published on Savings.com.au and was republished with permission.