Gen Z Back Passive Funds For Long-Term Growth

• Young adult investors have mostly been buying passive funds in the first month of the new tax year
• The US is the favoured market despite volatility, alongside broad-based global equity funds
• The only two actively managed funds have a growth-bias

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Q1 2022 hedge fund letters, conferences and more

Gen Z Back Passive Funds

Emma Wall, Head of Investment Analysis & Research at Hargreaves Lansdown:

“It is great to see young adult investors taking advantage of their tax wrappers so early in the new tax year. It has been a difficult start to the 2022/23 tax year, with significant market volatility caused by geo-political uncertainty and rising inflation – and corresponding central bank policy. Yet if you are investing for the long-term, as those in the cohort are, particularly in a LISA or SIPP wrapper, then it is the right thing to do to look through the headwinds to multi-decade growth opportunities. With a potential investment horizon of half a century in the case of a personal pension, inflation’s impacts – however painful in the present – are transitory and a broad-based competitively priced passive fund can be an excellent option. A global equity tracker will offer geographical diversification with a bias the economic giants of the globe. If you are looking to add to this allocation in the future consider upping your exposure to emerging markets. With a 20, 30, 40 year time horizon most investors can afford to take on more risk for the potential reward.”

Top investments by net buy (£) for those aged 18-29 in the period 5-28 April

Stocks & Shares ISA

LISA

SIPP

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