Miners, banks, and no ‘sexy’ companies: How millionaires invest

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Share investors with $1 million-plus portfolios tend to favour big Australian listed companies and shy away from investing in ‘sexy’ companies, such as lithium miners, which are popular with smaller investors.

High-net-worth investors, most of whom are baby boomers, prefer to opt for single stocks. Smaller investors, on the other hand, have their biggest exposures to Exchange-Traded Funds (ETFs).

Cath Whitaker, CEO of share investing platform Selfwealth, says its millionaire investors tend to hold shares in strong companies in strong sectorsCredit: Dan Peled

The figures from share investing platform Selfwealth, which has 130,000 users, 1200 of whom have accounts worth more than $1 million, show millionaire investors tend to hold big banks and the blue-chip miners, such as Fortescue Metals – their number-one pick.

By contrast, big banks do not feature among the top-10 holdings of Selfwealth’s smaller investors, with BHP down the list at number six and Fortescue at number nine.

While Vanguard’s Australian Shares Index fund, which tracks the returns of the largest 300 companies listed on the Australian Securities Exchange, is the millionaires’ second-largest holding, it is the only ETF to feature among the high-flyers’ top-10 holdings.

Neuren Pharmaceuticals, whose share price has almost trebled during the past 12 months, ranks as the millionaires’ eighth most preferred stock.

The firm develops treatments for neurological disorders and received approval in March this year for one of its treatments from the US healthcare regulator, the Food and Drug Administration.

Blood plasma giant CSL is the millionaires’ fifth most favoured stock, with A2 Milk Company at number ten.

ETFs occupy the first, second and third spots in the portfolios of smaller investors. Vanguard’s Australian Shares Index ETF is their favourite pick, followed by Vanguard’s Diversified High-Growth Index ETF in second place and Vanguard’s MSCI Index International Shares ETF in third spot.

These ETFs are listed on the Australian Securities Exchange and their units, just like all ETFs, are bought and sold in the same way as shares in listed companies. ETFs that track broad markets, such as international shares or Australian shares, are a low-cost way for investors to ‘buy the market’ and spread the investment risks from single stock exposures.

The Selfwealth figures reveal smaller investors are riding the lithium theme, with lithium developer Lake Resources their fourth most popular stock, followed by Core Lithium and Pilbara Minerals in eighth spot. The share prices of the first two companies are substantially down from their peaks.

Demand for high-quality lithium, however, is growing on the back of use in rechargeable batteries, electric vehicles and electronics, among other applications, as the world transitions to carbon neutrality.

Selfweath allows users to invest in securities listed on the Australian Securities Exchange, shares and ETFs listed on US stock exchanges and shares listed on the Hong Kong Stock Exchange.

The average account size of the 1200 Selfweath investors with $1 million-plus is $2.6 million. Almost 400 of the 1200 invest through their self-managed superannuation funds.

Cath Whitaker, the chief executive of Selfwealth, says the common theme of millionaire investors’ portfolios is their holding of “strong companies in strong sectors,” that have consistently delivered value through share price appreciation and dividends, particularly Australia’s big banks and miners.

She says millionaire investors may place a higher value on reliable dividends than do younger investors, depending on “where they are in their investing journey”.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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