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Millennials prioritise performance and cost over ethics

MillennialOver half of millennials interested in investing prioritise long-term returns and fees when choosing investment funds, while less than a third consider ethical causes such as environmental, social and governance (ESG).

Only 32% of millennials feel it is important to look at ethics or factor in good causes when investing, contradicting current sentiment that suggests ESG is of high importance for younger investors, according to a survey commissioned by the funds transaction network Calastone.

Second on the agenda for survey respondents is transparency of a firm’s investment strategy – with 53% of people aged between 23 and 35 saying they take this into account when deciding how to invest.

To most millennials, however, investing is not as high on their agendas as other activities. On average less than 40% take an active interest in finance compared to 69% for travel, 61% for social media, and 58% for video games.

Out of 3,000 respondents, almost 50% of millennials said they have a limited understanding of investments – “which could be inhibiting their ability to invest”, Calastone said.

Despite this, there is an appetite to invest. Over 80% of respondents with investment experience said they would be willing to invest more of their cash in the future, while nearly 70% of those without any experience said they would like to invest.

Income has also played a role in the spending habits of millennials.  

“Wage growth has been subdued for many millennials, leaving this demographic with less disposable income than the Baby-boomer and Generation Y cohorts,” Calastone stated.

“It is now imperative that asset managers acquire a better understanding of what this subset of the population needs, and ensure their strategies are closely aligned with those very same requirements.”

The post-Generation X demographic takes a particular interest in technology, with a great deal of millennials incorporating it into their lives. Indeed, almost three quarters of those surveyed said they would be open to buying investments from big tech companies such as Google and Apple.  

“Technology brands have built such a level of trust they could pose a threat to the asset management industry, who must consider how they can remain competitive,” said Calastone.

©2019 funds europe