The Future Investor:
A New Investment Class
September 22, 2022 | Boston
With increased capital and accessibility, digital prowess, and information at their fingertips, the newest investor class can’t be ignored. In 10 years’ time, Gen Z will become America’s largest generation with a population of 78 million, influencing brands and innovation.
With finance industry leaders, we explored the mindset of the newest finance class, growth trends and technologies, and welcomed the latest analysis of the metaverse from our own experts.
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- Stephanie Dobson, Portfolio Manager, Putnam Sustainable Future Fund and Putnam Sustainable Leaders Fund
- John G. Feyerer, Head of Innovation & Commercialization, US ETF & Indexed Strategies, Invesco
- Steph Guild, Head of Investment Strategy, Robinhood
- Kathryn Kaminski, Chief Research Strategist & Portfolio Manager, AlphaSimplex Group LLC, an affiliate of Natixis Investment Managers
- David Kelly, Chief Global Strategist, J.P. Morgan Asset Management
- Liz Young, Head of Investment Strategy, SoFi
- Amy Y. Zhang, Executive Vice President & Portfolio Manager, Alger
- Mandeep Singh, TMT Senior Analyst, Bloomberg Intelligence & Host, “Tech Disruptors”
- Janet Wu, Anchor & Reporter, Bloomberg
Mindset of the Next Gen Investor
“They feel like they’re the smartest generation because they have access to a lot more information,” said Steph Guild, Head of Investment Strategy, Robinhood. About 28% get their information from social media, compared to 10% of Gen Xers. “But, they’re using that information to build more wealth for the long term.” While they may not be the most patient, as a whole, they are almost unexpectedly conservative and not always micromanagers. “We are seeing them adding into the top positions, like Tesla, Apple and Amazon, and we are hearing a lot of, ‘I’m just not going to look at it’.”
Stephanie Dobson, Portfolio Manager, Putnam Sustainable Future Fund and Putnam Sustainable Leaders Fund added that young investors are focused on three elements; the desire for constant feedback on how their portfolios are performing, a long-term horizon and sustainability issues. On sustainability, “Investors are increasingly looking for companies to put their money where their mouth is from a people perspective, including how businesses support their employee’s mental health.”
Amy Y. Zhang, Executive Vice President & Portfolio Manager, Alger, said the newest generation is more interested in causes over returns, looking for companies focused on ESG and wanting to influence their growth. “Small companies don’t grow in a straight line. Investors are looking for that inflection point.” She talked about the edge investors and firms get when issues become part of the equation. “Over the short term, the market is a voting machine.”
The panel shared insights on the future of cryptocurrency, the new frontier of melding the old and new and more on using investment apps to weigh in on issues.
Invesco QQQ Sponsor Spotlight: Empowering Investors
Becoming the official ETF of the NCAA® and How Not to Suck at Money, Invesco’s digital finance educational platform are two dynamic ways to engage with the new investor generation, said John G. Feyerer, Head of Innovation & Commercialization, US ETF & Indexed Strategies, Invesco. He spoke about the new investor earning more, saving more, and investing it at a higher rate than previous generations, “which is why we’re exploring how they make financial decisions, and where their new money is flowing to.”
Focus on the Metaverse: Bloomberg Intelligence Presentation
How the metaverse ties closely with major investment opportunities was explained, with the expected in-depth analysis, by Mandeep Singh, TMT Senior Analyst, Bloomberg Intelligence & Host, “Tech Disruptors.” “Investors are more interested in the exponential opportunities,” he said, going on to identify new revenue categories with charts developed by his team of more than 400. For instance, with augmented and virtual reality a developing market, hardware is expected to soar to a $120 billion sector by 2030.
Risks and Opportunities in This Market
David Kelly, Chief Global Strategist, J.P. Morgan Asset Management, opened the discussion by pushing back on the “bad rep” Hollywood has given Wall Street. “Maybe I was left out of the party the whole of my career, but the culture I see is a lot better than people think.” For young investors, and everyone, really, he advises looking beyond the US, saying there is a “huge fear” about the rest of the world, describing the general view as, “It’s either tanks or tear gas, or both, that’s it.” A ceasefire in Ukraine, for instance, Kelly said, would mean “European stocks would take off. It’s a good place to put an extra dollar.”
Kathryn Kaminski, Chief Research Strategist & Portfolio Manager, AlphaSimplex Group LLC, an affiliate of Natixis Investment Managers added that the newest generation is coming from the perspective of more technical and data-oriented careers, and tend to look for that in investing. As a “quant,” she said young investors trust in the algorithms. “And I think the biggest excitement right now is there’s so much information out there, there’s so much easy access to it, and all you have to do is get the right tools to take advantage of that opportunity set.”
While they gravitate to the familiar, like tech stocks and big names, including banks, there is a decided trend toward “woke and disruptive” sectors, like cannabis, according to Liz Young, Head of Investment Strategy, SoFi. She cautioned that the familiar is not always going to produce good returns. Diversification still is important. “You’re probably going to have stuff in your portfolio that isn’t interesting, or you don’t understand why you need to own, but that is the purpose of making sure it acts the way it should in different market environments.”
On recession potential, Kelly said inflation will drop on its own and the Fed doesn’t have to be so aggressive with interest rates. “There is no point in tipping the economy into a recession to fight a battle you’re not going to win.” Young used the analogy of a tornado warning. “It’s been spotted, but will it hit?” The real question, she said, is how deep and long will it be, and what sectors it will affect.
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