ETF a rising craze among the Gen Z: Vanguard

Vanguard's latest research found younger Australians are more likely to incorporate ETFs into their portfolios, while older Australians continue to rely more heavily on traditional investment vehicles, particularly direct share ownership.

In its report Sitting on the sidelines: What's holding Australia back from investing? Vanguard spoke to 1002 Australians in February 2026 prior to the Federal Budget.

Nearly one in five Gen Z Australians report owning ETFs at around 19%, the highest rate of any age group. Ownership is slightly lower among millennials at around 16% and declines sharply among older Australians.

"This research confirms what we're seeing on the ground: young Australians are increasingly interested in investing and more likely to be using ETFs," Vanguard Australia managing director Daniel Shrimski said.

"That's why it's important that policy settings continue to support long-term investing, particularly for younger Australians."

The research also found men are more likely than women to report being very familiar or somewhat familiar with ETFs.

Simplicity and diversification were the standout reasoning for the rising appeal of ETFs. Around three in 10 respondents point to instant diversification across many companies or industries and describe ETFs as simple to manage with minimal ongoing effort.

Gen Z was also the cohort most familiar with ETFs at 45% following by millennials at 33%.

"The higher levels of ETF familiarity reported by younger Australians may reflect the fact that ETFs have only been available in the Australian market for 25 years, with the first Australian ETF launching in 2001," Vanguard said.

Vanguard data showed approximately two thirds of accounts on its personal investor platform are held by people under 45, with this group also the fastest-growing cohort.

In 2024 and 2025, Vanguard Australia saw 42% annual growth in accounts held by investors under 45, compared with 32% for those aged 45-64 and 14% for those aged over 65.