Wealthy millennials make “conservative” investors

Europe’s wealthy millennial investors expect an 8% annual average rate of return on their portfolios, a survey indicates – yet their low risk appetite has prompted a prediction of disappointment. A survey of 1,267 millennials across the globe found the average expected annual return was 11%, with Europe’s millennials expecting 8% and US millennials harbouring the highest expectations, at 14%. Globally, cash made up the largest part of portfolios, with an average allocation of 24%. Equities were, on average, the second largest allocation, at 19%, followed by real estate (18%) and fixed income (17%). Legg Mason Global Asset Management, which sponsored the survey, said that millennials were also short-termist in their investment outlook. Asked to define a “long-term” investment horizon, 35% of millennials said long-term was defined at two years or less, while 26% said two to five years. A quarter said five to ten years, and 13% said more than ten years. Matthew Schiffman, head of global marketing for Legg Mason, said millennial risk appetite maybe influenced by history. “My generation came of age as investors during the risk-on environment of the 1980s when we were rewarded for taking risk. However, my parents were depression-era kids whose memories left them extremely cautious investors. Today, at least in the US, millennials have come of age as investors during a tumultuous period – from the dotcom bust to the Great Recession. Like my parents’ generation, perhaps millennials’ conservative approach to investing has been defined by the history of their lives.” He added: ““The question we have to ask is, with longevity increasing and all the attendant costs associated with it, by not investing in more growth-oriented assets where risk and return are commensurate, are millennials putting themselves at risk downstream in terms of capital formation?” When it comes to how they invest in equities, 91% of global millennials said they have equity investments in exchange-traded funds – with a high of 97% in the US and a low of 82% in Australia. ©2016 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.