Gen Z and Millennial investors have in the past financial year flocked to companies looking to play a role in the clean energy revolution, while Baby Boomers continue to snap up Australian blue-chip investments, highlighting the growing generational divide in investment markets.
Gen X investors, meanwhile, took a shine to big technology players such as Tesla and Microsoft, according to data collected by trading platform SelfWealth that looked at the buying activity of investors with million dollar-plus portfolios in the 2023 financial year.
SelfWealth brand and content lead Robert Marfell said while higher interest rates have weighed on trading activity of those with relatively lower income and younger generations, the latter cohort was increasingly drawn to exchange-traded funds (ETFs): a type of pooled investment.
“More people, especially younger people, are investing in ETFs because you don’t have to have had years of investing experience, and it’s become a bigger part of the public consciousness,” he said.
Marfell said while younger generations were betting on technology stocks – which can be riskier but experience higher growth rates – and green energy-related players, Baby Boomers were making safer bets. Iron ore miner Fortescue and ASX-listed healthcare giant CSL were particularly popular with Boomer investors.
“Leo Lithium and Lithium Energy were the fourth and eleventh most bought securities by Millennials and Gen Z cohort through June,” he said. “Baby Boomers with established portfolios favoured sectors like mining, banking, and hybrids, mostly centred on blue-chip stocks.”
Boomers also liked BHP on the back of a rally in iron ore, Marfell said, and preferred ETFs that offered income like the BetaShares Australian High Interest Cash ETF. “People in their 40s, 50s and 60s are often not as growth-focused and prefer dividend stocks,” he said.
But Marfell said Gen X bucked the trend among older cohorts, with many invested in tech names such as Microsoft, Apple and Tesla. “Gen X is a tech generation because they’ve grown up in a different market and invested through the dotcom era,” he said.
And although younger investors tended to buy into environmental trends, Marfell said there were also some who opted for mining stocks.
SelfWealth’s data focused on millionaire investors but Marfell said many of the trends were reflected in the buying activity of those with smaller portfolios.
One difference identified was that millionaire Millennials were involved in shorting and leveraging through ETFs such as BetaShares Australian Equities Strong Bear Hedge Fund (BBOZ), which are negatively correlated with Australian sharemarket returns.
By contrast, the data showed that Millennials with smaller portfolios tended not to leverage.
US stocks were popular across all generations, Marfell said, comprising 37 of the top 50 bought securities on SelfWealth in June. CSL and Estia Health were the only two ASX-listed stocks in the top 50.
Marfell added he’d seen an increasing appetite for knowledge about finance over the past year, and that educational material such as podcasts and videos were becoming increasingly popular.
Looking forward, Marfell said he expected to see a large influx of younger investors when mortgage rates started come down and that the trend towards green investments would prevail.
“The only trend I’m confident to say will continue is the capitalisation on the trend to decarbonisation,” he said.
Source: Thanks smh.com