Lex Hall: Let's talk about what are people buying? Give us the 10 stocks, if you like, or if you can remember them, well, I'm sure you can—the sectors, if you like.

Gemma Dale: Sure. Yeah, yeah. So, looking at the ASX, because the vast majority of buying is on the ASX. You can via nabtrade buy direct stocks in the US and the UK, Germany and Hong Kong, but primarily the US, let's be honest. But it was over 95 per cent within Australia. So, people were buying at home first. They were buying three of the big four banks. They're buying BHP. They bought Qantas, Webjet and Flight Centre. So, this was interesting. We wouldn't see that typically. Qantas is in there occasionally, but not all the time. Those obviously got absolutely hammered when market came off. There was obviously a concern that they would need enormous government bailouts if they were going to survive at all, that they needed enormous support just to make it through this period. Qantas has been burning cash because its planes were on the ground and so on. So, those were very opportunistic buys from investors, pretty confident that we will have a national carrier at the end of this even if they have to hurt badly in the meantime. And if I buy it at rock bottom prices, I'm going to do well in the long run. So, they were very opportunistic.

Buying the banks and BHP, that's building a long-term portfolio. That's buying a core. ASX 200 ETF—now, we chose one—not we chose one—we took the most bought, but had we aggregated all of them, it may well have been higher in our listings. So, if we'd said, Vanguard plus State Street plus BetaShares plus all of the others, then it might have been actually a bigger number again. And then, we saw Zip and Afterpay. That were the other two. Now, Afterpay has been in our top 10 for several years now. That's not a new entrant by any means. And many of our investors have done unbelievably well out of it.

Hall: Will they sell?

Dale: Sorry?

Hall: Rhetorical question, will they sell?

Dale: They might take profits. I don't see them selling it entirely, but they'll take a bit of profit. What's happened for a lot of investors? Because they bought it so cheaply, when it's $100 and your other stocks have fallen in value, suddenly it's 40 per cent of your portfolio and you have to trim it just to get yourself into a bit of balance.

Hall: Right. Are they moving the market, this new wave of retail investors?

Dale: There's a suggestion they are in the US. There's been a bit of extrapolation to the Australian market, which is very different. So, institutional trading is somewhere between 80 per cent and 90 per cent of total trades in Australia, which means people are hypothesising that between 10 per cent and 20 per cent of the market is driving prices. I think it's very unlikely. As I said, we talk to the regulator and we talked at the ASX and we talk to many market participants on a regular basis about this. Small participants can move the price in very small things. If you've got a smaller liquid stock and you've got a handful of people who are very active, they can move those. The chances of them moving everything else…

Hall: Minimal. OK. And as a non-savvy retail investor I pay $20 a trade. Zero brokerage: what are your predictions … will that continue, is it sustainable, will share trading be this ubiquitous thing that everybody does and will laugh at you for not doing?

Dale: So, the zero-dollar trades—Robinhood, which is this phenomenon that everybody is talking about, is a US-based trading platform. It's on the phones very sexy and easy to use and all that kind of stuff and it's clearly aimed at younger people and it's commission-free, so zero-dollar brokerage. The critical thing is it's not free to provide a trading platform, right? You have regulatory costs. You've got technology costs. You've got to provide support. All that kind of stuff, right? So, it's not free. It's very expensive to set one up. So, if you're providing your services for free or your core service for free, you're going to have to make money somewhere else. The way Robinhood makes money, they've got a couple of different things. One is they generally upsell people into more complex products where they're making margin, so the equivalent of margin lending, options trading, other more complex instruments. You can buy crypto on Robinhood if you wish. Now, the issue with Robinhood is that because it's very much—very popular with novice investors if they're moving into complex products very quickly without having gained any experience or really learned about them, there's a lot of risk there, and that's played out very badly in some scenarios, which is a bit tragic. But the other thing they do is they sell their trading data to high-frequency traders who then effectively front run retail investors.

Hall: So, they act on the information that they've got before everybody else.

Dale: They do, yeah, which is illegal in Australia and theoretically, it's illegal in the US too, but somehow, it's very widespread. A lot of investors don't care, right? If you pay one cent more than you expected to on a stock, it doesn't make any difference. It makes an enormous amount of difference to high-frequency traders, because they're doing so much of it, doesn't make a lot of difference to you. So, some people don't care about that. And if you're paying zero-dollar brokerage and the ways that the platform makes money don't affect you, perhaps that's fine for you. If you are paying less than the cost of service for something, you kind of need to understand how they're making money and that you're not adversely affected by that in a number of different ways.

So, I think in Australia we have a different regulatory environment. High-frequency trading is much less common here. The ASX is absolutely scrupulous about this kind of stuff. That's very different. The regulator has different views. They actually put handbrakes on several brokers during this crisis because volumes were getting too high. So, this is quite interesting. So, it's hard to say. I think costs will come down over time because they do in anything technology facilitated. As technology gets better and faster, we can do more. On the flip side, free doesn't cover your costs and ($4.95) doesn't cover your costs. We'll say they're not even close. So, if you are paying very, very little, you need to understand how they're making money. And it might be fine with you, right, so long as you understand it.

Hall: Yeah. OK. Gemma, we could talk all day. I'll just remind our viewers that you can catch Gemma Dale on the nabtrade Your Wealth podcast. Thank you very much for your insights today.

Dale: Thank you.

Hall: I'm Lex Hall for Morningstar. Thanks for watching.