Managing assets through an online investment platform has favoured investors aged 26-37 during lockdown, research by investment firm Charles Schwab UK found.
According to the study, among the young investors who manage their assets online, 44% have seen the value of their portfolios increase over the past three months.
In comparison, just 15% of those aged 55+ have had a similar outcome.
Charles Schwab UK believes this is because accessing investments via an online platform made it easier for younger people to rebalance their portfolios and keep them diversified.
Additionally, those aged 26-37 are more likely to take investment advice, the firm discovered.
Lack of engagement means losses
The survey polled 1,000 retail investors in the UK across all age group; and those who engaged with their portfolios through an online platform were twice as likely to have made gains during lockdown.
Richard Flynn, UK managing director at Charles Schwab, said: “Coronavirus has caused volatility in markets across the world, causing a degree of uncertainty, inertia and panic amongst retail investors.
“However, it appears that older investors in the UK could be facing more significant losses than other age groups, as they are not regularly engaging with their money.
“According to our research, they are less likely to use online platforms and are, therefore, less likely to make prudent rebalances to their portfolios.
“This demographic is more likely to rely on analogue investment information, such as monthly factsheets, whereas the use of online platforms has given younger groups the ability to respond more flexibly to changing market trends.
“While it is important not to be overly reactive to market movements, especially in times of market stress, it is worth taking steps to ensure your portfolio is sufficiently diversified,” he added.
‘Behavioural shift’
Charles Schwab also found that younger investors were more likely to use the covid-induced market volatility as an opportunity to seek investments.
More than three in four (78%) 26-37-year-olds saw the current condition as a chance to look out for under-valued assets; with 24% acting on this by increasing their holdings in stocks and shares that have fallen during the past few weeks.
This could be attributed by a higher appetite for risk, the investment firm said.
The most popular asset classes for young investors were equities (24%) and corporate bonds (22%), whereas over-55s preferred cash and gold, showing a more defensive and protectionist investment strategy.
Regular engagement
Flynn added: “A behavioural shift is becoming apparent, with new generations of UK investors looking beyond borders, sectors and traditional investment tools of investment to maximise returns.
“The challenges faced by investors during the pandemic have highlighted the benefits of regularly engaging with your portfolio and taking an open, considered and diverse approach.
“While this is already adopted by younger groups, older age groups do not as readily share this broader, more internationalist outlook.
“While often maligned as inattentive and averse to investing, millennials are subverting performance expectations through digital savviness, willingness to consider advice and taking an active role in their financial future.”
