From Australia to Germany to Canada, the typical new investor is increasingly diverse and in their early-to-mid-30s—a millennial.3 People in every generation experience transformative events that shape how they think about and manage money. Boomers shrugged off their Depression-era parents’ financial anxieties and plowed money into stocks during the eighties and nineties, ultimately accelerating the rise of the global mutual fund industry.4 Millennials, by contrast, graduated into the Great Recession, took on burdensome debt, and faced higher hurdles for owning a home.5 The Covid pandemic and its economic fallout hit twenty- and thirty-somethings hardest; many lost jobs and income and had less savings to rely on.6
"The popular narrative that first-time investors are fast-money traders stalking internet bulletin boards for meme-stock manias is overhyped—more are choosing ETFs"
Rather than be deterred by financial upheaval, the recent burst of investment account openings shows an entire generation prioritising small steps required to manage their finances. New investors say they feel empowered by the simplicity of digital investing platforms and the convenience of ETFs.7 Many new investors say they opened accounts because it was easy to start with a small amount of money, and most say they plan to stick with investing for years.8 These are healthy steps toward long-term financial well-being.
The popular narrative that first-time investors are fast-money traders stalking internet bulletin boards for meme-stock manias is overhyped.9 Only a tiny fraction of cumulative retail trading over the past couple of years was in meme-stocks, while about two-thirds was dedicated to purchases of ETFs, according to recent research.10 The meme stock narrative also misses how important financial security is for millennials, who came of age amidst economic uncertainty, and how discerning they are as consumers—experienced in researching and buying online, sensitive about paying too much, and deeply concerned about sustainability.11 Millennials now outnumber any other generation and are becoming a defining force in investing as many enter prime savings years and some are due to inherit wealth from previous generations.12 And as the millennial investor meets the ETF—which at 32 years old is the millennial investment tool—it could potentially bode well for the growth of both.13
We began 2021 responsible for managing the assets of over 100 million people around the world, fifty years after introducing our first index client and twenty-five years after our first ETF client.14 We’re proud that our capabilities have the potential to help make investing more accessible, affordable, sustainable, and customizable for the long term. Our 2022 iShares Report on Investor Progress is about why we think that all first-time investors should be iShares investors, and why we believe millennials will be a driving force in creating another 100 million iShares ETF and index investors in the next five years.