Young ASX investors are putting their money into tech and social causes
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Young investors are kicking the property habit for stocks — and it looks like the tech sector and social causes are benefiting.
Clients of youth-focused Acorns — a mobile-first investment platform that automatically invests spare change — are asking for socially responsible funds, tech stocks and bitcoin, says boss George Lucas.
And contrary to findings from the ASX and Deloitte, younger investors have a much higher risk tolerance than expected, Mr Lucas says.
Acorns’ aggressive portfolio is the most popular option with 18-34 year olds, he says.
Acorns offers six exchange traded funds. Investments can be made via an app and there’s no huge minimum preventing cash-poor 20-year-olds starting a portfolio.
Acorns launched a social portfolio in June on the back of demand. While only 3 per cent of customers have so far taken it up, investments are high — $1000 per customer compared to $400 in the aggressive portfolio.
“It’s a lot more popular than I expected,” he told Stockhead.
Stocks that support generations of the future
Conservative and innovative investing are two sides of the same coin, says Adam Myers, executive director at fund manager Pengana Capital.
Conservative investors are interested in business models that support the generation of long-term shareholder values, Mr Myers says.
“They are the business models that are likely to thrive in the future.”
So it’s hardly surprising that things like green energy, social causes and technology are popular among young investors.
Bitcoin is one investment category where younger investors have the floor to themselves.
The ASX’s only listed bitcoin company, DigitalX (ASX:DCC), has about 100 investors under 35 on the register. This is partly due to 30-something CEO Leigh Travers’ network — and partly because bitcoin is a concept older investors don’t tend to understand.
That’s not to say it’s the best investment.
This week DigitalX received a much-needed cash injection from Blockchain Global of $2 million in cash and — of course — bitcoin, with another $2.35 million to come. At the end of June it had about half the cash it needed to finance the current quarter.
Aggressive or conservative? Depends what you’re saving for
Spaceship is another company which thinks it’s got its allocation settings right for the smashed avocado generation.
Marketing itself as a super fund for the Snapchat generation, Spaceship made a bold choice to weight its single fund, the GrowthX, 52 per cent towards global tech companies.
An aggressive 87 per cent of the fund is in local and global shares, and 13 per cent is split among cash, fixed interest and property.
But then again, if you’re 25 and saving for super you can afford to be aggressive. If you’re saving for a house, that’s another matter entirely.
Deloitte partner John O’Mahony was responsible for the ASX report that found younger investors were more conservative.
It “flummoxed” them too.
But Mr O’Mahony says it does make sense — it comes down to money and motivation.
“The people who have less to invest are more likely to be risk-averse,” he told Stockhead.
“And because they need that money now [for a house deposit or travel], that leads to some risk aversion.”