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How the different generations invest
Market Outlook

How the different generations invest

When it comes to their overall approach, they have more that unites than divides them, they all tend to have some exposure to the US.
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21 MAR, 2023

By Emma Wall

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Older and younger investors have some striking differences when it comes to their portfolios, but an awful lot of it is driven by them tailoring their investments to their stage in life. When it comes to their overall approach, they have more that unites than divides them.

Both older and younger investors are looking for positive growth stories. Both age groups hold oil majors and banks – reflecting their history of producing strong dividends, and the profits oil companies have been making while the oil price is higher.

However, different generations of investors are seeing opportunities in different places. Younger people are more likely to have technology companies in the mix, taking advantage of the way tech is transforming economies around the world. Parents also favor these stocks for their JISA portfolios. Meanwhile, older investors see the potential in pharmaceuticals as the population ages.

Top shares (alphabetical) by age group

18-5455+
Amazon.comAstraZeneca
AppleAviva
BPBP
International Consolidated Airlines GroupGSK
Legal & General GroupLegal & General Group
Lloyds Banking GroupLloyds Banking Group
Microsoft CorporationNational Grid
Rolls Royce HoldingsRio Tinto
ShellShell
TeslaUnilever

How they approach trading also varies by age. Those aged 65 plus trade the least, followed by those aged 18-29, and investors aged 30-54. Those aged 55-64 trade much more than their nearest rival, but that may be because they are approaching retirement and need to position their portfolio differently for capital protection and income rather than growth.

When it comes to selecting funds, there are some themes that appeal across the generations. All have exposure to global funds, and to those that spread the net far and wide.

Younger investors favor tracker funds, which offer exposure to long-term growth at a low cost. They also have some smaller company funds in the mix, which reflects the fact that those with a longer time horizon tend to be able to take a little more risk.

While investors of all ages tend to have some exposure to the US, younger people may have more, partly because the market is dominated by some of the technology and growth stocks they favor.

When parents are picking funds for a Junior ISA, they’re aware that with a time horizon of 18 years, they can afford some more adventurous funds. So among trackers and global funds, they have smaller companies and emerging markets.

As we get older, we are marginally more likely to pick a sustainable fund, which makes it to the top ten for those in mid-life. And as your investment needs change, income funds play a more important role.

Top funds (alphabetical) by age group

18-2930-5455-6465-8081+
Baillie Gifford AmericanBaillie Gifford AmericanArtemis IncomeArtemis IncomeArtemis Income
Fundsmith Equity
Fundsmith EquityBNY Mellon Global IncomeBNY Mellon Global IncomeBNY Mellon Global Income
HSBC FTSE 250 IndexHSBC FTSE 250 IndexFundsmith EquityFundsmith EquityFundsmith Equity
Legal & General International Index TrustLegal & General International Index TrustLegal & General International Index TrustJupiter EuropeanInvesco Monthly Income Plus
Legal & General UK IndexLegal & General International Index TrustLegal & General International Index TrustLegal & General International Index TrustInvesco UK Equity High Income
Legal & General US IndexLegal & General International Index TrustLegal & General International Index TrustLegal & General US IndexJPM UK Equity Core
Lindsell Train Global EquityLindsell Train Global EquityLindsell Train Global EquityLindsell Train Global EquityJupiter European
Lindsell Train UK EquityLindsell Train UK EquityLindsell Train UK EquityLindsell Train UK EquityJupiter Income
Rathbone Global OpportunitiesRathbone Global OpportunitiesRathbone Global OpportunitiesRathbone Global OpportunitiesLindsell Train Global Equity
UBS S&P 500 IndexStewart Investors Asia Pacific Leaders SustainabilityStewart Investors Asia Pacific Leaders SustainabilityStewart Investors Asia Pacific Leaders SustainabilityMarlborough Multi Cap Income
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