Future Focus: How did your portfolio perform against other Aussie investors?
The new State of the Australian Investor report reveals portfolio performance and how trading impacted results.
Mentioned: BHP Group Ltd (BHP), CSL Ltd (CSL), Goodman Group (GMG), Vanguard Australian Shares ETF (VAS), Vanguard MSCI Intl ETF (VGS)
I spent the last few months working through data on Australian investors in partnership with Sharesight. The result is the State of the Australian Investor report, which analyses the transaction data, portfolio performance, decisions and mood of Australian investors. Over the next few editions of Future Focus, I want to explore some of my favourite insights from the report. You can find the full report here.
There is a difference between being an engaged investor and constantly tinkering.
I was curious about how trading impacted performance. I’ve seen academic studies showing the more an investor traded the more their outcomes suffered. When I started working with Sharesight to gain insights into what investors are doing in their portfolio this was one of the topics I wanted to explore.
It turns out my hypothesis about the correlation between trading frequency and performance was correct. Across a group of self-directed investors tracked by Sharesight, investors who traded more frequently tended to earn lower median returns than those who traded less often.
In the 2025–26 financial year, investors who made no voluntary trades recorded a median portfolio return of 12.0%. For investors who made more than 100 trades, the median return was 9.6%.
For investors who are analysing investments at a basis point level, this behaviour is reducing their returns by a significant amount - 2.4%. The data does not prove that frequent trading caused lower returns, but the pattern raises an important question for investors – is constantly adjusting a portfolio worth it?
The typical investor traded five times
Sharesight’s data covered 97,000 investors, 121,000 portfolios and 7.5 million trades. The trading figures in the report reveal a significant gap between the typical investor and the most active traders.
The median investor made five voluntary trades in both FY2025 and FY2026. The average number of trades per investor rose from 30.6 to 41.7 over the same period. Total voluntary trades increased from 3.38 million to 4.07 million, a rise of around 21%.
The average can be pulled upwards by a relatively small group of very active investors, with the proportion of investors who traded at least once actually fell, from 73.2% to 71.6%. In other words, the increase in trading was not a sign that everyone had become more active – it was driven largely by a cohort of investors who traded frequently.
The returns
The relationship between trading frequency and median returns was visible across investors with different levels of trading.
In FY2026, the median return for investors who made between one and five trades was 11.6%. For those who made between 26 and 50 trades, it was 10.4%. Among investors who made more than 100 trades, it was 9.6%.
The proportion of portfolios recording positive returns also declined as trading frequency increased. In the highest-activity group, 77.6% of investors recorded positive returns, compared with 83.1% of those who made no voluntary trades (these are trades that exclude corporate actions or dividend reinvestments).
The pattern was also apparent in FY2025, suggesting it was not unique to a single financial year.
There is an important qualification to this data. The relationship is not a simple rule that every additional trade reduces returns. Investors who made more than 100 trades had an equal-weighted mean return of 13.99% in FY2026, higher than their 9.64% median.
That gap tells us something about the distribution of outcomes. Some highly active investors achieved very strong results, lifting the average even though the middle investor in that group earned a lower return.
Frequent trading may work for some investors, but the median outcome suggests that doing more is not automatically a route to doing better.
Why trading can work against investors
The report measures trading frequency and returns but it doesn’t establish why more active investors had lower median returns. There may be several potential explanations.
Trading creates more opportunities to get the timing wrong
Selling an investment because it has fallen can lock in a loss or leave an investor on the sidelines when the market recovers. Buying after a strong run can mean paying a higher price after much of the good news is already reflected in the market.
Consistently making these decisions well is difficult. You don’t just have to be right about the investment, but also when to buy and when to sell.
Every change creates a new decision
When you’ve used strategic asset allocation to hold a diversified portfolio for the long term, there’s inevitably going to be disappointing periods. When you’re tactically allocating and constantly changing holdings, you need to repeatedly decide which investments to buy and sell, and whether the new state of your portfolio is better. Each decision introduces another opportunity for a mistake.
If you trade frequently you may be responding to noise instead of signals
We are surrounded by market noise. Financial markets are full of headlines about interest rates, geopolitical tensions, company earnings and economic forecasts. Some developments have meaningful implications for long-term investment values. Others do not make any material difference to your long term outcomes.
When you’re frequently making changes to your portfolio, it can reflect an attempt to respond to every new piece of information, rather than a disciplined assessment of whether your portfolio requires a change.
Trading has costs
Brokerage and other transaction costs reduce returns. The Sharesight data accounts for brokerage recorded against trades, but brokerage information was available for only around two-thirds of trades. The report therefore does not capture every investor’s full trading costs.
Tax can also matter. Selling an investment at a profit may trigger a capital gains tax liability, depending on the circumstances. These costs have not been accounted for in the performance returns, but are a very real cost. Tax should not be the ultimate decider when it comes to investment decisions, but returns should be assessed in the context of after-tax and fee outcomes.
Caution does not mean doing nothing
The report also found that Australian investors continued to put money to work during periods of market volatility despite indicating they have a cautious outlook.
We looked at three periods of market ‘shocks’ – the global sell-off in August 2025, and market volatility associated with tariffs, and the Iran war. Across three market-event windows examined in the report, buying exceeded selling by roughly two to one on the busiest trading days.
Survey responses were consistent with this behaviour. When asked how they would respond to a market correction of 10% or more, 93% of respondents said they would either hold their investments or buy.
This suggests that caution and action are not mutually exclusive. Investors can feel concerned about markets while remaining committed to their long-term plans.
Buying during a downturn can be a rational strategy when it is consistent with an investor’s goals, time horizon and capacity for risk. The key distinction is whether the decision follows a considered investment plan or an impulse to respond to market movements.
When to make a trade
The report found that light traders achieved the best performance for the cohort. It is not an argument against reviewing your portfolio or making changes. It is about ensuring that when you do make a trade, you are doing it with a purpose in mind – it meets your investment strategy, or there is a legitimate reason for selling an investment.
1. You’ve reached your goal
This is the best reason to sell an investment – you’ve reached your goal. You are saving money for your children’s university tuition, a home, a car, or you are meeting scheduled withdrawals for retirement. Investments are a means to an end. It’s not about accumulating the most money or adding commas to your brokerage account. It’s about getting to your financial goal. Simply put, you need the cash for your financial goal, so you sell.
2. Fundamental changes to investment attributes
It is rare but sometimes, an ETF or fund undergoes a meaningful change in strategy or increases fees significantly. Since these are key parts of the process to evaluate an investment, a meaningful change may cause you to revisit your original decisions.
3. Your thesis is broken
Sometimes the thesis for why you bought your investment no longer holds.
For example, you’ve purchased Airbnb because you believe that the company will continue to be at the forefront of alternative accommodation due to a Wide Economic Moat (the company can protect and grow earnings for at least the next 20 years). You may revisit this decision if Airbnb’s faces a backlash and are banned from major markets due to anger over rising housing costs.
Investing is an exercise of predicting what will happen in the future. Sometimes, the prospects for companies change in a negative way.
The purpose of an investment is to achieve your financial goals. If it no longer aligns with what you are trying to achieve you may want to make a change.
The value of leaving a good plan alone
The Sharesight data represents self-directed investors who actively track their portfolios, not the entire Australian investing population. Returns also vary with portfolio composition, risk exposure, market conditions and the timing of contributions and withdrawals. The findings cannot establish that trading less would have improved every investor’s outcome.
But the consistency of the relationship across two financial years offers a useful reminder.
Investing requires making decisions, but it does not require constant action. For many investors, the challenge is not finding an attractive opportunity. It is deciding whether an opportunity genuinely improves the portfolio they already have.
Sometimes the most valuable investment decision is the one you do not make.
What else can you find in the report?
- The average performance of Australian investors included in the study
- Their portfolio composition
- Their confidence levels in retirement
- The most popular holdings, and the most traded holdings
- How investors reacted to market shocks
You can find the full report here.
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