There is a growing generational divide amongst UK retail investors in the way they are approaching investing, revealed by findings in the latest Investment Forces research from Charles Schwab UK. Gen Z and Millennial investors are adopting much more active and open strategies than Gen X and Boomers, as a new, bolder generation of investors emerges.
Gen Z, in particular, are demonstrating trader-like behaviours, suggesting the rise of a generation of traders – ‘Gen T’.
Younger investors are making far more regular changes to their investments, with 6 in 10 (58%) making trades and adjustments to their investment portfolio on a monthly basis, compared to almost half as many (38%) older investors. This aligns with the proportion of those investors who make daily changes to their portfolio: 8% of Gen Z and Millennials vs 4% of Gen X and Boomers.
Investors more optimistic about overseas opportunities
Investors of all ages are increasingly optimistic about the investing opportunities available in overseas markets, with the number of respondents who perceive both emerging markets and frontier markets as viable options for their investment allocations increasing year-on-year.
Again, however, younger investors are more optimistic than their older counterparts: while 55% of Gen X and Boomers believe there are good investment opportunities in overseas markets, this number rises to 69% amongst Gen Z and Millennials. The same can be seen in appetite for US investments specifically, which are appealing to 62% of older investors and 71% of younger investors.
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Likewise, younger generations are far more positive about certain asset classes and strategies than older generations. More than a quarter (26%) of Gen Z and Millennials are already investing in futures and 64% view this class as a good investment option.
In contrast, just 10% of Gen X and Boomers are already investing in futures, and fewer than half consider them viable investments.
Opinions on fractional shares mirror this, with 65% of younger generations willing to consider them, compared to 42% of older investors. There are also marked differences in the use of copy trading – a style of investing which allows people to automatically copy positions by other investors – between age groups, with 77% of Gen Z & Millennial investors already using or considering the approach, in contrast to 49% of Gen X and Boomers.
“A clear divide emerging”
Richard Flynn, UK Managing Director at Charles Schwab, said: “We are seeing a clear divide emerge between more seasoned retail investors and those that have more recently entered the field. The younger ‘Generation Trader’ cohort welcomes a wider range of investment opportunities, be it in overseas markets or in less familiar asset classes, while investors at a later stage of life are more likely to stick with what they know. It will be interesting to see whether the rise of Gen T yields stronger investment performances, and whether this is the beginning of a surge in interest in trading in the UK. While retail trading is a well-established phenomenon in the US, it is less mainstream in this country, but perhaps our research signals a change.”
Charles Schwab UK provides UK-based investors and traders with access to global markets via a range of investment and trading offerings. Charles Schwab’s investment platforms provide investors with access to a wide range of global investment products such as equities, exchange-traded funds (ETFs), bonds and options. In relation to the US market specifically, UK investors can purchase US-listed equities with $0 commission for online trades, no service fees, and a $0 minimum to open an account.
