Wealthy millennial, Gen Z investors skeptical of traditional stocks, bonds: report
High net worth investors under age 43 had only 25% of their portfolios allocated to stocks on average
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According to a report released Tuesday by Bank of America, many high-net-worth millennial and Generation Z investors are skeptical of traditional stocks and bonds.
About 75% of high-net-worth investors under the age of 43 said they think it's "not possible to achieve above-average returns solely on traditional stocks and bonds," the 2022 Bank of America Private Bank Study of Wealthy Americans report found. Meanwhile, just 32% of wealthy investors ages 43 and up expressed that sentiment.
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The report categorized Gen Z as people between the ages of 21 and 25 and millennials as those between 26 and 42.
On average, high-net-worth millennial and Gen Z investors had 25% of their portfolios allocated to stocks or stock funds, whereas older investors surveyed allocated 55%, according to the report.
Investment manager discussing and analyzing stock market graph (iStock) (iStock / iStock)
Roughly 80% of younger investors "are looking to alternative investments," Bank of America said. Wealthy millennial and Gen Z investors allocated 16% of their portfolios to alternative investments on average, 11 percentage points more than older investors.
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Twenty-nine percent of high-net-worth millennial and Gen Z investors said cryptocurrencies offer the greatest growth opportunities, compared to just 7% of investors 43 or older, according to the report. About 47% of investors under 43 hold cryptocurrency assets, and their average portfolio allocation to crypto was 15%.
Cryptocurrency mixing platform, Tornado Cash, has been hit with US sanctions over allegations of money laundering. Cryptocurrency Illistration picture taken on Jan. 24, 2022. (REUTERS/Dado Ruvic/Illustration / Reuters)
Younger wealthy investors also said direct investments into companies (25%), private equity (25%) and companies or funds that focus on environmental, social and governance (ESG) presented top growth opportunities (24%). Both younger and older high-net-worth investors saw investment growth opportunities in real estate, with 28% of millennials and Gen Z investors and 31% of 43+ investors saying so, the report said.
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The Bank of America report also found wealthy millennial and Gen Z investors are more likely to hold ESG investments than older investors. The percentage of those above age 43 who had ESG investments was 21%, while it was 73% among younger wealthy individuals.
A trader looks at his screen on the floor of the New York Stock Exchange June 29, 2010. Investors fled the U.S. stock market on Tuesday and the S&P 500 tumbled to its lowest level in eight months in a sell-off triggered by a wave of increasin … (REUTERS/Brendan McDermid / Reuters Photos)
The survey was conducted for Bank of America between May and June among over 1,000 high-net-worth respondents over 21 years old with $3 million or more in investable assets. Its margin of error was +/-3, with a confidence level of 95%.