Millennial investors who are concerned about environmental, social, and governance (ESG) factors may be setting unrealistic return expectations.
The assessment was from Courtney Waterman of Schroders, according to Asset Servicing Times. Citing the 2016 Schroders Global Investors Survey, Waterman told attendees at the ALFI European Asset Management Conference that investors aged 35 and under expected an average of 10.2% per year in returns, compared to a global stock market performance of 3.75% at the time of the survey.
While they set an ambitious target, such investors were not inclined to take on capital risk. Waterman noted a general trend toward “short-termism” as investors planned to hold their investments for an average of just 3.2 years. Among all respondents, just 18% said they would hold their investment for more than five years. Zero in on millennials, and the statistic shrinks to just 8%, while 41% said they would invest for under a year.
When asked what they prioritize in their investments, the millennial respondents tended to rate ESG considerations as highly as “some of the more financial factors.” Waterman suggested that getting returns that kept up with inflation was considered of equal importance to supporting “a company that is looking at the impact it has on the environment around it.”
Millennials reported being more willing to stay with an ESG investment for the long haul, even if it underperformed expectations. Around 91% said they would continue such an ESG investment.
Waterman noted that such a fixation on ESG issues could be the key to engaging the next generation of investors.
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