Most investors only trade once per year: What does this mean for public companies?

Recent data from a study of over 350,000 investors shows that the majority of investors only trade once per year. This insight reveals a crucial aspect of investor behaviour: they tend to hold on to their investments and make fewer active decisions than commonly assumed. This tendency aligns with findings from the ASX Australian Investor Study 2023, which highlights similar trading patterns and broader investor behaviours across different demographic segments.

A snapshot of investor behaviour

The ASX study reports that while on-exchange investing is rising, particularly with Exchange Traded Funds (ETFs) and international shares gaining popularity, most investors still adopt a “buy and hold” strategy. This suggests that despite market fluctuations, many investors prefer stability and are not frequently reacting to short-term changes. Here’s what the data tells us:

• 42% of investors monitor their portfolios at least weekly, but frequent trading is far less common.
• Self-managed superannuation fund (SMSF) investors, who are generally more engaged, also exhibit a tendency towards long-term holding.
• Overall, most investors place their trades through online brokers (70%), with only small groups using robo-advisors or financial planners to execute trades.

Implications for companies

For companies, these insights should prompt a rethink of how they communicate with investors. If most investors are only making one trade a year, they are likely to base their decisions on well-researched, long-term perspectives rather than reacting to short-term news.

Here are the key implications and how companies can adjust their strategies:

1. Control your message and reduce reliance on intermediaries.Many investors only act once a year, often after conducting thorough research. If companies rely too heavily on third-party sources, such as media or analysts, they risk allowing others to shape their narrative. As noted in the ASX study, 34% of investors find it hard to trust certain information sources. By taking control of their messaging through an investor centre, companies can ensure that investors get the correct, undistorted version of their message directly.
   • Recommendation: Every company announcement should direct investors to a dedicated investor centre, where they can access explanatory videos and resources that provide greater context, removing the need for third-party interpretation.
2. Engage with long-term investors through value-driven content.Since many investors are not trading frequently, they are more likely to focus on the overall value proposition of a company rather than reacting to each quarterly result. Therefore, consistent communication, such as shareholder webinars, and educational content can keep these long-term investors engaged even during quieter periods.
   • Strategy for quiet periods: Hosting a Q&A webinar where shareholders can submit questions in advance provides multiple engagement points: first to collect questions, second to run the event, and third to promote the recorded session afterward. This keeps investors informed and invested in the company’s long-term story.
3. Leverage video content to boost engagement.Complementing traditional announcements with video content has been shown to significantly increase investor understanding and engagement. Video can simplify complex information and offer a more personal connection with the company’s leadership. The ASX study shows that next-generation investors, in particular, are drawn to engaging formats like short videos and social media for information.
   • Tactic: For every announcement, provide a simple, engaging video summary that directs investors back to your investor centre for further details. This multi-step engagement can increase traffic to your website by up to five times and ensure that investors fully grasp your message.

The role of investor education and trust

The ASX study emphasises that trust and education remain critical issues for many investors, particularly women and younger investors. Many investors report feeling uncertain about how to choose investments or which sources to trust. This lack of confidence can lead to lower levels of engagement or a focus on more traditional, lower-risk assets.

By taking the initiative to provide regular educational content—such as videos, blog posts, or webinars—companies can help bridge the gap in financial literacy. This not only supports investors in making informed decisions but also builds long-term trust.

Conclusion: Long-term focus, consistent communication

The fact that most investors trade only once a year highlights the importance of steady, value-driven communication. Companies need to focus on long-term engagement strategies, ensuring that investors receive clear, consistent updates directly from the source. By utilising their own investor centres, offering accessible video content, and engaging through interactive formats like webinars, companies can strengthen their relationships with shareholders and ensure their message remains intact.