Gen Z portfolios outperform their older peers: How Brits invested in 2023

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Written By Daily Mail

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  • Each age group did enough to outperform the FTSE 100’s 2.3% return in the fourth quarter.
  • Younger investors are more likely to own investment trusts and passive funds.

Data suggests the younger group of investors outperformed older Britons in the final three months of 2023 with the help of cheap investment trusts and passive funds.

The Interactive Investor Private Performance Index shows that platform users in the 18 to 24 category saw the value of their portfolio increase by an average of 6.4 percent in the last three months of the year, narrowly exceeding a yield of 6.2 percent. for people from 25 to 34 years old.

Each age group did enough to beat the FTSE 100’s return of 2.3 per cent over the same period, but all lagged the FTSE World index’s gains of 6.9 per cent.

Outperforming: Gen Z Investor Portfolios Have Great Fourth Quarter

Outperforming: Gen Z Investor Portfolios Have Great Fourth Quarter

However, despite an excellent fourth quarter, both younger categories delivered a 17.2 percent annual return for 2023 top performers in the 35-44 age category.

The younger generation’s 16.6 percent return in 2023, which compares with an average annual return of 14 percent, was bolstered in the latest quarter as huge exposure to investment trusts appeared to pay off. fruits.

About 27.7 percent of the portfolios of 18- to 24-year-olds were invested in investment funds last year, compared to an average of 20.2 percent.

The only other generation with comparable exposure was the over-65s category, at 26.8 per cent, while all other age groups had invested much less in unit trusts.

The youngest group of investors obtained the best results in the last quarter of 2023

The youngest group of investors obtained the best results in the last quarter of 2023

The average London-listed trust began 2023 at a discount to net asset value of 11.7 percent, according to the Association of Investment Companies, before hitting a post-2008 low of 16.9 percent at the end October and recover to 9 percent. December 31st.

Myron Jobson, senior personal finance analyst at Interactive Investor, said: “Younger investors have apparently benefited from their above-average exposure to investment trusts, many of whom have seen their discounts narrowed thanks to improved prospects. economic”.

“Holding investment trust shares when they are trading at a discount while investment trust managers have the ability to adapt can potentially produce a better return on invested capital, although losses may be exacerbated during periods of poor performance.”

Divisions: How different age groups divide their portfolios

Divisions: How different age groups divide their portfolios

What assets do young investors have?

Alliance Trust was the most held asset in 2023 among younger investors, according to Interactive Investor, followed by Scottish Mortgage, Fundsmith Equity and F&C Investment Trust.

Alliance Trust has delivered a share price return of 13.2 per cent in one year, according to the AIC, while adding a total net asset value return of 14.9 per cent.

Surprisingly, the 18 to 24 age group had only 20.8 percent of their portfolios in stocks, compared to 24.8, 29 and 32.8 percent in the 25 to 34, 35 to 44 and 45 to 54.

In fact, data suggests that the older the investor, the more likely they were to invest in stocks.

Younger investors were more likely to back investment trusts than their older peers.

Younger investors were more likely to back investment trusts than their older peers.

An exception for those aged 18 to 24 is Lloyds Banking Group, which is the tenth largest holding company among this age group.

Other notable holdings in the age group were the low-cost passive funds offered by US giant Vanguard, whose funds were popular among all age groups.

The 18-24 year old cohort owned the Vanguard FTSE Developed World ex-UK Equity Index, Vanguard Life Strategy 100 per cent Equity and its 80 per cent equity counterpart, and the Vanguard S&P 500 ETF.

Younger investors also had a larger cash pile than any other category, holding an average of 10.5 percent of portfolios, compared with an average of 8.9 percent.

Jobson said: “Interestingly, the average cash holdings as a proportion of Interactive Investor clients’ overall portfolios is a similar proportion, give or take a percentage point or two, to what it has been over the last few years, even as interest rates were very low.

‘This suggests that, while cash forms an important part of a well-diversified portfolio, our clients are inherently investors and often prefer to have cash easily accessible to invest where they see opportunities with a minimum of delay and error.

“The decline in cash positions could indicate growing confidence in equities following the easing of factors that have weighed on markets, namely inflation.”

Gender split: The data also showed that women outnumbered men in the last quarter and from January 2020 to December 2023.

Gender split: The data also showed that women outnumbered men in the last quarter and from January 2020 to December 2023.



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