During January and February 2024, Bank of America conducted a study on the decisions and preferences of high net worth investors in the United States. the decisions and preferences of high net worth investors in the United States. The study sample included 1,007 individuals over the age of 21 with investable wealth in excess of $3 million. The results revealed clear generational trends, highlighting differences in priorities and preferences according to the age of the participants. This analysis is presented as a key key benchmark for anticipating changes in future investment horizons as wealth transfers to younger generations.

Three key issues emerging from the study are explored below: generational views on the economy, the composition of investment portfolios, and risk and liquidity preferences.

1- Generational views on the economy

Younger investors (Generation Z and millennials) are more optimistic about both the U.S. and global economies. Fifty-one percent of those under 44 rate the U.S. economy as very strong, while only 24% of those over 44 share this sentiment. This optimism holds when assessing the global economy.

2- Portfolio composition and investment trends

Generational differences extend to investment portfolio preferences and portfolio diversification. The results showed a clear trend in which The results showed a clear trend in which young people prefer alternative investments over traditional stocks and bonds given the growth potential they assign to alternative assets. Currently, young investors hold a 17% weighting in alternative assets, which is more than a three-fold increase compared to more experienced investors.

As can be seen in the graph above, 93% of 21-43 year olds believe that they are very likely to allocate a higher weighting to alternative assets in their portfolios in the coming years. This shows the long-term interest in this type of investments and reinforces the perception of their growth.

3- Diversification preferences

The asset allocations of younger investors in different asset classes show changes in preferences and act as a signal of changes in the rules of the game. show changes in preferences and act as a signal of changes in the rules of the game. The allocation within the investment portfolio of younger investors, and how it differs from investors older than 44, can be seen below:

Much of these differences are attributed to a possible cautious mentality held by younger people, who have developed a preference for more diversified portfolios. cautious mindset held by younger people, who have developed a preference for more diversified portfolios. Bank of America notes that the past has left its mark on investment trends. The fact that young people have experienced, during their developmental stage, two market crashes - the bear market between 2000 and 2002 and the decline in equity values by more than 50% between 2008 and 2009 - may have generated skepticism that the youngsters are more cautious. may have generated skepticism about the stock market in this generation.

The Bank of America study highlights the evolving landscape of evolving landscape of investment trends and preferences among high net worth Americans. Understanding these generational differences is crucial in order to assess stock market influences, economic uncertainty and changing investment paradigms. Ultimately, it is critical to continue to evaluate them in order to understand the future evolution of the investment market as wealth transfers to younger generations.

Martina Jauregui
International Funds Analyst Fynsa AGF