FRUSTRATED investors are shifting their focus from many of Australia’s largest and most popular companies as years of underperformance take a toll.
New research by CommSec has found that just 33 per cent of shares traded by self-managed super funds are from the ASX 20 index of blue chip stocks, down from 40 per cent a year ago. For non-SMSF investors, just 29 per cent of trading is in the ASX 20. But experts warn it’s unwise to completely ignore the big guns because they’re likely to fire again in the future when the market cycle changes. Being diversified is the best bet.
The ASX 20 index has long been dominated by the Big Four banks, resources giants BHP, Rio Tinto and Woodside, Telstra, Woolworths and Wesfarmers.
The Commonwealth Bank, NAB and Telstra are still the most popular stocks traded, according to CommSec’s new SMSF Trading Trends Report, but are a smaller proportion, while biotechnology giant CSL and the a2 Milk Company have surged in popularity.
Technology-focused stocks Wisetech Global and Afterpay Touch are also attracting more attention, it says.
“SMSFs are looking outside the top 20 and have been moving into some of those better performing sectors,” said the Commonwealth Bank’s head of SMSF customers, Marcus Evans.
“However, they’re still very comfortable buying where they see value. The banks and telcos have really struggled over the last couple of years but as these stocks get beaten down we see the SMSFs come in and start buying. They have a very long-term investment horizon.”
Mr Evans said investors today were better informed about opportunities outside the traditional blue chips.
Baker Young Stockbrokers managed portfolio analyst Toby Grimm said some investors had been chasing growth “irrespective of the price they are paying for that growth”.
Some tech stocks were trading on valuations 10 times the overall market average, and there were questions about whether that could be justified, Mr Grimm said.
“We would exercise a little caution. Growth is a good thing but price does matter.”
The biggest companies were still likely to perform strongly in the long term, he said.