Born between 1981 and 1996, Millennials represent the fastest-growing share of the investor market and their influence is only going to get bigger for years to come, according to a new study. 
Broadridge's Insights on U.S. Investors, which looks primarily at the retail investment marketplace, finds that a much broader range of Americans are investing and engaging in U.S. financial markets, with Millennials, as well as households with the smallest amount to invest, growing in influence from year-end 2017 through June 30, 2020.
Millennials grew as a percentage of overall U.S. investors studied from 9% to 14% over the period and Gen X (born 1965–1980) grew from 24% to 27%. Meanwhile, Boomers (born 1946–1964) decreased as a total percentage of investors studied from 46% to 43% and the Silent Generation (born 1928–1945) also declined as a percentage of investors from 20% to 14%; that said, both groups still comprise 57% of the number of investors analyzed across the generational segments.
Rise of the Mass Market
Additionally, households with the smallest amount to invest, referred to as the Mass Market, grew in influence with a rising share of households and assets under management (AUM). Defined as households with less than $100,000 in investable assets, this segment of investors grew from 30% to 38% of households, with the Mass Affluent ($100,000 to less than $1million) dropping from 57% to 51% and High Net Worth ($1 million plus) dipping from 13% to 11% during the study period.
The Mass Market also represents a growing share of asset ownership, defined as investments in mutual funds, ETFs and U.S. equities. “Many are investing using cost-effective ETFs, and more have broader access to low-cost institutional shares, highlighting a changing investing landscape,” says Bob Schifellite, Broadridge’s Investor Communication Solutions President.
Despite lower household AUM of 10% of the overall assets studied, the Mass Market gained 3% in asset ownership share since 2017. In contrast, Mass Affluent and High Net Worth AUM decreased over the same period. Compared to higher wealth segments, Mass Market households are more likely to be served by the broker-dealer channel and less likely to be served by the online, RIA and wirehouse channels, the study notes.
But in noting that generational wealth transfers offer an opportunity, Broadridge further observes that wirehouses are investing in ways to reach Millennials and the Mass Market by actively making acquisitions and changes to their business models and branding. Additionally, wirehouses hold the highest share of HNW investors, a possible edge in the generational wealth transfer—if they connect effectively with heirs.
“The study highlights trends that are indicative of things to come and present enormous opportunity for asset managers and advisors who adapt to address the emerging needs of investors,” notes Dan Cwenar, Broadridge’s President of Data and Analytics. “Money is expected to continue to flow into low-cost investment vehicles such as passive and active ETFs and Millennials and Mass Market investors will continue to gain influence as their assets grow.”
Institutional Shares and ETFs
While A-class shares and institutional shares are the most widely held by households, the study found that A-class shares declined in household ownership from 43% at the end of 2017 to 39% as of June 30, 2020. During the same period, household ownership of institutional shares grew from 44% to 54%.
According to the findings, household ownership of ETFs grew steadily from 30% to 37%. By contrast, the share of mutual funds increased 2% over this period, although U.S. equities growth was flat.
Broadridge also observed limited pandemic asset shifts across generations. Boomer and Silent generations were at or above their pre-COVID AUM levels by the end of June 2020. Boomer and Silent generations comprised 76% of household AUM and fared slightly better than Gen X and Millennials who were slightly below pre-COVID AUM levels.
Purchases of U.S. equities, however, increased to 31% as of June 30, 2020, which was a 3% uptick over 2019. Increases were experienced most by Millennials, followed by Gen-X and Boomers. And while both Millennial men and women increased equity holdings, men showed a bigger shift, rising from 25% of total holdings in 2019 to 35% by June 2020, compared to 20% to 25% for women during the same period.
The findings in the study are based on a de-identified sample of 20,000 households extracted from a dataset of 44 million households that invest in mutual funds (open-end, closed-end), U.S. equities and ETFs sold through financial intermediaries. Includes data for year-ends 2017, 2018 and 2019 and the first half of 2020.
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