Majority of affluent millennials are interested in alternative investing but lack sufficient knowledge on the benefits of this type of investing, according to a survey by AMG Funds.
More than three-fourth (83%) of millennials were found to be open to a broader approach to investing such as alternative strategies, compared to 52% of investors aged over 35. However, 69% wished that they had more knowledge about the benefits of alternative investing.
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Further, 70% of the respondents held the view that a liquid alternative mutual fund would benefit their existing investment portfolio.
According to the survey report, 78% of millennials cited that active management provides incremental value, and 94% of the millennials owning actively-managed mutual funds have said that they plan to maintain or increase allocations to active funds.
Growth maximisation emerged as the top investment goal for 27% of the millennials. The customer group also gave importance to generating income – a goal typically associated with retirees, revealed the study.
The study also found that while millennials are usually optimistic on the US economy and global markets, their outlook is significantly affected by market volatility.
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By GlobalDataAbout 30% of millennials, which is significantly more than any other age cohort, said that were likely to reduce their equity exposure or exit the market entirely in case of 20% drawdown.
Millennials also recognise the value added by financial advisors in offering investment oversight, the study revealed. Sixty percent of millennials said they are willing to pay more for this oversight, while 90% of advised millennials said that they rely most on financial advisors for portfolio diversification.
AMG Funds CEO Jeffrey Cerutti said: "Our findings show that Millennials have an open mind with respect to investing, and that even in an increasingly technology-driven world, they value the skill of experts in both stock-picking and financial advice.
"Our findings are a call to action for advisors to engage with these clients, so they can address Millennials’ unique investing needs and perspectives while providing advice and education around the benefits of alternative strategies and active management."
