The fund transaction network Calastone has released research revealing that investing in environmental, social and governance (ESG) causes is not a primary issue for younger prospective investors.
The study, which surveyed more than 3,000 people aged 23-35 across the UK, France, Germany, US, Hong Kong and Australia detailed that long-term returns on capital, low fees and transparency were the most important criteria for millennials making investments.
In other words, the report suggests that younger generations have the same priorities as their older counterparts and favour the basic pre-requisites of investing before considering ethics.
The appetite to invest remains high, with the majority of respondents indicating they would invest some of their assets going forwards. Approximately 84 percent of millennials with investment experience agreed that they would be willing to invest more of their cash in the future, whilst 68 percent of those surveyed without any investments also stated they would like to invest.
Long-term returns and fees was the most important issue for investors in their mid-twenties and early thirties, with 53 percent of millennials seeing it as a matter of key consideration when choosing investment funds. Another crucial issue for young people was the need for transparency, with 50 percent wanting to see the investment strategy of any firm they might invest in.
Less than a third (32 percent) of millennials felt it was important to consider ethical issues when choosing an investment fund. This is contrary to the notion that ESG is a signfifcantly more prevalent issue for younger investors.
Calastone’s survey additionally asked respondents about their views on personal saving, investment management and financial services. The data revealed that there is still a strong demand to communicate with experts in person, with 42 percent considering this their preferred method. Nevertheless, when it comes to selecting a financial services provider in the first instance, they do consider online access to be the most important element.
They are also willing to trust big tech companies with their investments, with 50 percent of young investors stating that they would purchase investment products through a technology company such as Google, Apple and Microsoft. This presents a challenge to the asset management industry, as technology companies have established a level of trust with millennials. Furthermore, 31 percent of respondents who already hold investments stated they would trust a computer algorithm to invest on their behalf.
The study additionally highlighted an educational gap among young people investing, with 47 percent of millennials referencing a limited understanding of investing or investments, which could hamper their ability to invest savings effectively.
This finding further establishes the differences between younger and older investors shown in the research. Technology will remain a significant factor for millennial investors, and the importance of providing credible information to educate their investment decisions will be a key issue for the wider financial industry. That said, there are also surprising results from the survey, with the middling level of interest in ESG and the support for traditional investment approaches possibly providing a level of reassurance to asset managers.
Calastone has over 1,800 customers in 41 countries and territories, processing over 9 million messages and £170 billion of transactions each month. It is headquartered in London and has offices in Luxembourg, Hong Kong, Taiwan, Singapore and Sydney.
