Australia’s ETF boom refuses to slow down as $7 billion invested in August

Investor home loan applications have plunged since the federal government’s tax changes came into effect in May as new figures reveal Australians are pouring record sums into exchange-traded funds instead.

At Commonwealth Bank alone, home investor home loans have dropped roughly 28 per cent.

The news comes amid a record $7 billion flowing into Australian-listed ETFs in August alone — the biggest monthly investment on record — a figure that raises questions about whether property is losing its status as the nation’s investment of choice.

Nobody’s claiming the same dollars moved from one to the other, but the timing has one of Australia’s best-known investors convinced they’re connected.

That was Motley Fool Chief Investment Officer Scott Phillips’ reaction on 7NEWS’ latest episode of Money Talks , powered by Vanguard, when asked about the scale of the shift.

Phillips’ theory isn’t that money is being pulled out of property and dropped into shares.

It’s that would-be investors who’d normally be saving a deposit for a rental property are redirecting those same monthly savings into the share market instead, because the numbers on property no longer add up the way they used to.

He points to investors, particularly at the big banks, who were previously putting money aside every month toward a property purchase and are now asking the same question with nowhere obvious to put the answer except shares.

While property and shares fight it out in the headlines, superannuation just became a lot more attractive without anyone announcing it.

Contributions inside super are still taxed at 15 per cent instead of your marginal rate, and the reduced capital gains tax rate hasn’t changed.

With the tax perks of investing outside of super now smaller, super’s relative advantage just went up.

Phillips says he’s already fielding calls from people shovelling extra cash into it to capture the benefit.

As Phillips detailed on 7NEWS’ latest episode of Money Talks, powered by Vanguard, every year Vanguard releases an index chart tracking a hypothetical $10,000 investment in the Australian share market since 1996.

Left completely untouched, that $10,000 would be worth roughly $132,000 today.