The generation game: millennial investors vs baby boomers

Our new data highlights the very clear differences and similarities between different generations.

What do investors of different generations tend to have in common on interactive investor, the UK’s second largest direct to consumer investment platform? 

A penchant for Scottish Mortgage (LSE:SMT), Alliance Trust (LSE:ATST) and Fundsmith Equity, which are all amongst the top 10 holdings of the average millennial and baby boomer generations. When it comes to direct equities, Royal Dutch Shell (LSE:RDSB), Lloyds (LSE:LLOY), and GlaxoSmithKline (LSE:GSK) also each feature in both.

Yet when comparing millennials and baby boomers, two of the FAANGS - Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN), each due to release their quarterly results tomorrow, only appear in the top 10 most held stocks among the average millennial. For the average baby boomer, Apple and Amazon do not appear in the top 10.

Lee Wild, Head of Equity Strategy, interactive investor says:

“There are far more similarities than differences across the generations when it comes to investment behaviour, but it is notable to see the FAANGS – or at least some of them – hogging the top 10 among the average millennial. Younger generations have grown up with these brands, but since they are firmly embedded in all our lives now, and given they have more than held their own during the current crisis, it will be interesting to see if things start to shift.”

Equity dominates, but baby boomers prefer investment trusts

While direct equities are the most dominant investment vehicle (42% for the average baby boomers and 39% for the average millennial), there are some interesting differences: investment trusts are more popular with baby boomers, where the average account has 27%, compared to 20% for millennials. 

Millennials are more than twice as likely to favour exchange traded products than baby boomers (12% compared to 5% for the average baby boomer). When it comes to funds, the average baby boomer has 25% in funds compared to 28% for millennials.

Myron Jobson, Personal Finance Campaigner, interactive investor, says: “There’s no question that whether millennial or baby boomer, people like to pick their own individual stocks. But whilst investment trusts have been serving generations for over 150 years and have clear multi-generational appeal, they are more popular with baby boomers compared to millennials. Millennials are more than twice as likely than baby boomers to choose ETFs – which are still young upstarts compared to investment trusts, and the Vanguard LifeStrategy range also seems to be more on millennials’ radar.”

Baby boomers lead the way on ethical investing

Despite a common perception that ethical funds are a ‘Millennial thing’, baby boomers are a little ahead of the game on ethical funds.

Baby Boomers have moved from 0.47% of assets in ethical funds/investment trusts on 31 December 2015 to 5% (as at 27 April 2020), outstripping millennial investors which saw assets in such investment products rise to 4.35% at 27 April 2020 from 0.88% in December 2015.

Myron Jobson, Personal Finance Campaigner, says:

“Interestingly, assets held on our platform in ethical propositions has increased significantly over the last four years as more products have become available, with Baby Boomers leading the charge. This could suggest that older generations are concerned about not just passing on wealth but passing on a healthier planet. The dramatic increase in ethical exposure could be down to a combination of factors: more availability, increased awareness, and long-term performance.”

Top 10 most held investments among generational cohorts on interactive investor (at 27 April 2020)

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.