Australian millennials prioritise long term returns over ethical causes when choosing funds, Calastone study reveals ______

09 Oct 2019

A global study released by Calastone, the largest global funds transaction network, has found that Australian millennials place greatest emphasis on long term returns and fees when choosing investment funds, with ethical funds, causes and products being their least important consideration.

The Calastone survey, which surveyed more than 3,000 people aged 23-35 across Australia, U.K., France, Germany, U.S. and Hong Kong about their attitudes to personal saving and investing, showed Australian millennials to be the most returns focused (60%) compared to their global peers (53%) when choosing investments.

Australians are also keenly aware and focused on the associated fees and expenses of investing, ranking these as the second most important consideration (59%) followed closely by the reputation of the fund or firm (58%).  Transparency of the firm’s investment strategy was also an important selection consideration, at 57%. These results were pronounced among millennials already invested.

The survey revealed a global consensus in the least important consideration being investment in ethical funds, causes and products, a surprising outcome for a generation widely accepted as being behaviourally led by their support for social, ethical and governance issues.  Just 37% of Australian millennials said this was an important factor. For this criteria to rank last shows how sharply focused millennials are on returns and the impact fees have on their investments.

Another surprising finding was the preference among millennials to speak with an expert in person prior to allocating capital as well as prioritising online and app capabilities, highlighting the need for asset managers to provide omnichannel services.

While 71% of young Australians said they were currently saving, second only to Hong Kong’s 91%, only 10% invest in funds. Despite this being a relatively small subset, millennial Australians have invested the most, with an average investment value of A$63,850, considerably higher than the global average investment of A$44,500.  76% of local respondents said they planned to invest in the future.

Ross Fox, Calastone Managing Director Australia and New Zealand, said the survey results challenged some widely held views about millennials and reveals a potential costly disconnect between what millennials need and what the industry thinks they want.

“This study shows a generation of investors who are clearly outcomes focused and demand greater transparency, accountability and engagement than comparatively wealthier generations before them.  Managers who can tailor product offerings, diversify direct engagement channels, demonstrate their value and maintain transparent investor communication will be the winners in attracting and retaining capital from this maturing millennial market,” he said.

Other study findings showed that 59% of Australian millennials were open to buying investments from big tech companies, more than  average survey response of 50%.

“While big tech companies such as Apple, Amazon and Netflix have not yet made inroads into asset management, many experts expect they will at some point, so asset managers need to be thinking now about how to innovate and improve customer experiences the way in which these companies continue to transform the everyday lives of people of all ages and backgrounds,” Mr Fox said.

Fox said that the study also found gender disparity to be an issue for the global investment industry, with 39% of young men owning investment products compared to 27% of women.

“Calastone’s findings reveal areas of focus for asset managers and their distribution channels to improve engagement with millennial men and women who are clearly receptive to long term investing provided they see value and transparency and receive good service along the way.”

To access Calastone’s full survey, you can follow the link at: https://www2.calastone.com/millennialsresearch

Featured articles