Young investors outperformed older cohorts during pandemic
Young investors have outperformed all other age groups since the start of the coronavirus pandemic, a study reveals.
Those aged 18-24 returned 17.2 per cent on average over the last 18 months, according to customer data from investment platform Interactive Investor.
In comparison, investors aged 25-34 made 15.3 per cent on average, 35–44-year-olds earned 14.6 per cent, 45–54-year-olds brought in 12.3 per cent, 55–64-year-olds made 9.8 per cent and the over 65s returned just 7 per cent.
Interactive Investor said the youngest age bracket had a much greater exposure to investment trusts compared to its average customer base.
Exposure to investment trusts can boost performance in a rising market but be a drag in a falling market. That’s because many investment trusts can gear – or borrow – to enhance returns.
The average 18–24-year-old held almost 34 per cent of their portfolio in investment trusts compared to the typical 35-44-year-old who had 12 per cent.
Scottish Mortgage, Alliance Trust and Fundsmith Equity were among the most popular funds and trusts for all age groups.
When it came to stocks, Apple, Amazon and Tesla were among the most popular among the 25-34 and 35-44 age cohorts. Apple and Tesla were favourites for 45-54-year-olds and Lloyds Banking Group, Royal Dutch Shell and AstraZeneca were amongst the most favoured by the over 55s.
Richard Wilson, chief executive of Interactive Investor, said: “Successful investing means taking a long-term view, avoiding knee-jerk decisions, and diversifying well, which we have seen many customers doing to navigate the storms. During a period when we have often heard about younger investors ramping up their risk profiles, our data suggests that the cliches might need revising.”
Wealthy investors with accounts of £1m or more outperformed all other asset bands over 18 months, returning on average 17.7 per cent. Those with accounts of between £100,000 and £1m made 13.2 per cent on average and investors with £50,000 to £100,000 got 9.5 per cent.
Interactive Investor customers based in the Channel Islands have performed the best since the pandemic began, followed by those in Scotland and London.