Investors face risks from poorly spread share portfolios
New Zealanders may be keen share investors by international standards, however they appear to be far from prudent.
Tuesday, August 8th 2000, 12:00AM
Research put out by the Stock Exchange last week says 44 per cent of New Zealanders have some form of share investment compared to 54% in Australia, 52% in the United States and 40% in the United Kingdom.
While a reasonably large number of New Zealanders say they have some form of share investment, they don't have a particularly well diversified portfolio.
The NZSE research, which was done by CM Research, says New Zealanders have poorly diversified portfolios and the average holding is small.
Close to two thirds of New Zealand direct share owners have shares in three or fewer different companies. The average number of companies held in a New Zealand portfolio is 4.4. A similar survey in Australia showed that people on the other side of the Tasman have an average holding of 6.
Both these averages are very low and make it hard for an investor to have good diversification.
The survey also shows that a third of share owners bought their first direct shares more than 15 years ago, and 24% bought their first shares within the past three years. While this information isn't broken down in any more detail it is reasonable to assume the so-called newcomers are people who have been given shares by life offices in the demutualisation process, or bought shares in Auckland Airport, Contact and Capital Properties - floats by the Government targeted at the Mums and Dads.
One of the interesting findings is that the new entrants more than likely fit the following profile: 25-34 years old, female, lower income.
Also, almost half of all direct share owners had portfolios of less than $10,000 and about 19% had portfolios worth less than $2,500.
Despite the advent of online trading New Zealanders don't seem to be big on trading their shares with 48% saying they have not bought or sold shares in the past 12 months.
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