Buying the dip: Raiz investors buy into Telstra’s new vision

Raizinvest.com.au

The Nightly

3 Min Read

26 May 2024

Raiz sees 6000 investors take the opportunity to jump on the telco’s
falling share prices after this week’s cost-slashing announcement. — Raiz sees 6000 investors take the opportunity to jump on the telco’s falling share prices after this week’s cost-slashing announcement. Credit: Darren England/AAP

Buying the dip is a common investment strategy and it could be why Raiz Investors became so interested in Telstra this week.

On Tuesday, Australia’s largest telco Telstra ($TLS) announced it would axe 2,800 jobs, cutting 9% of its workforce as part of cost-cutting measures.

It’s part of an organisational “reset” and was about moving the company forward but its share price still took a hit on the news, starting the week at $3.96 a share and dropping to $3.43 on Wednesday’s close.

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For Raiz Investors however, this presented an opportunity with a 72% increase in trading activity, with close to 6,000 investors jumping into the stock. Telstra has seen weekly increases since last month, with an over 2000% increase in activity since April.

Fortescue Metals Group ($FMG) is another Australian staple that this week saw a 60% increase in activity on the platform. The stock has been flying higher recently along with the rest of the ASX200 mining stocks.

This has been driven by new stimulus measures in China that are viewed favourably by our miners, in particular those in the Iron Ore space. Fortescue is looking to expand its base metals exploration, with a new drilling grant in WA. All of this could explain a 600% increase over the month in Raiz trading activity.

The same though can’t be said for Pilbara Minerals ($PLS) which saw a 57% drop in activity by Raiz investors. The lithium stock had a good run at the start of the month, with activity climbing 447% from the middle of April until early last week. There’s no particular news that would cause this dip and it could just be an anomaly.

AMP Limited ($AMP) suffered a similar anomaly, with shareholders jumping back in after last week’s significant dip of over 30%. It’s back up 70% this week which brings it back to levels seen at the beginning of the week. This suggests that last week’s dip was an anomaly as opposed to an investor trend.

Once again though, ETFs remain the investment vehicle of choice for Raiz investors with a 1152% difference in the top 10 ETFs over the top 10 stocks. The big mover for ETFs this week was BetaShares Global Sustainability Leaders ($ETHI). It’s the BetaShares ETF which tracks the performance of stocks identified as Climate Leaders but does exclude those with exposure to fossil fuels.

It is a consistently featured stock in the top 10 on Raiz, and is close to breaking through the 100,000 trades a week mark. This week saw trades up 26% to 97,991 which is close to its peak for this year.

Also up with $ETHI was the Russell Investments Australian Responsible Investment ETF ($RARI). This ETF has similarities with the ETHI index as it tracks companies that demonstrate positive ESG characteristics. It does go beyond ETHI though by also analysing companies social and governance risks as well.

This style of investment is quite popular with Raiz investors who tend to skew younger, and the style of ETFs that monitor ESG have been increasing in popularity. ETHI is up 528% over the month, which RARI is up 490% over the same time period.

BetaShares Global Cybersecurity ($HACK) is the only ETF in the top 10 this week to slip, falling just 11%. Its numbers tend to stay around the 10,000 level so it will remain to be seen if it’s a trend of falling or not. The theme of cybersecurity isn’t going away and HACK is often labelled by Motley Fool as a strong buy, particularly due to its 33% return.

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Raiz Invest Australia Limited – Authorised Representative of AFSL 434776. The Raiz Invest Australia Fund is issued in Australia by Instreet Investment Limited (ACN 128 813 016 AFSL 434776) a subsidiary of Raiz Invest Limited and promoted by Raiz Invest Australia Limited (ACN 604 402 815). PDS and TMD are available on the Raiz Invest website and App. You should read and consider those documents before deciding whether, or not, to acquire and continue to hold interests in the product.