Commonwealth Bank of Australia (ASX: CBA)'s CommSec platform is renowned as one of, if not the, most popular brokerage services in the country. It enables investors to buy and sell ASX shares, as well as shares traded on international stock markets.
Given the rise of newer, 'cooler' brokerage services like Superhero and Stake, which offer slick, millennial-friendly interfaces, one might be forgiven for thinking that CommSec is a little too 'old-world' for millennial investors.
Not so, if a new report is to be believed.
The 'Robinhood effect'
According to a report in the Australian Financial Review (AFR) today, the so-called 'Robinhood effect' in the US has spilled over into CommSec's coffers. The Robinhood effect is the term used to describe the rapid increase in market participation from younger investors. It was first sparked by the popular (and free) US broker Robinhood, which is not available in Australia.
This effect has accelerated since the onset of the coronavirus pandemic for several reasons, including the rapidity of the market recovery last year (which is still going), after the sharpest market crash in history. Large stimulus programs in both Australia and the US probably helped as well.
Millennials and Gen Z flock to the ASX
According to the AFR, the number of first-time users of CommSec's platform has surged by 125% since the onset of the pandemic. The number of CommSec customers with no previous share market experience more than doubled as well. The report tells us these traders went from making up 8% of CommSec's total customer base in February 2020 to 18% by December.
Around 83% of those new customers were reportedly under 44, a 17% increase. Since the start of the pandemic, first-time traders accounted for roughly 10% of all trades on the platform. That's up from around 4% prior to the pandemic.
The report confirms that CommSec is enjoying the spoils from a rising tide. Stake has also reported surging use, and 60% of its customer base is under 35.
This 'Robinhood effect' is certainly less controversial in Australia than in the US. Increased ASX millennial and Gen Z market participation hasn't become associated with the kinds of unfettered and wild trading that we have seen coming out of the US. That was exemplified by the GameStop Corp (NYSE: GME) saga from a few weeks ago. The millennial/Gen Z-dominated WallStreetBets Reddit group spearheaded the GameStop short-squeeze. According to the report, WallStreetBets now has over 8 million members following the saga.
It looks as though younger investors are a force that is here to stay.
