Impact Millennials
MCF Intersection
A regular snapshot of the trends, news and research in the world of philanthropy — and its impact on business.
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Impact investing continues to gain momentum among high-net-worth Americans in 2018, largely driven by younger investors’ commitment to socially responsible companies, according to a report released Tuesday.
Overall, 40% of high-net-worth investors surveyed by U.S. Trust, the private wealth management arm of Bank of America, either own or invest in companies with a strong environmental, social, political, and governance (ESG) track record, compared to 38% two years ago.
The company’s annual wealth report surveyed 1,000 high-net-worth individuals—those with investable assets of at least US$3 million, excluding their primary residences—in January through February.
The upward swing is led by millennials, 77% of whom either own ESG or include impact investments in their portfolio.
“The millennials want to do well, they also want to do good,” says Joe Quinlan, head of market strategy at U.S. Trust. “Now that they are one of the largest investing cohorts, the trend is more pronounced.”
Another significant trend among millennial investors over the course of last year is that they are growing more comfortable with equities with higher risk exposures, Quinlan says.
MCF Intersection
A regular snapshot of the trends, news and research in the world of philanthropy — and its impact on business.
Connect
The average millennial’s equity investment increased to 46% in 2018 from 25% last year, while cash holdings dropped from 47% to 21%. Overall, average allocations of high-net-worth portfolio were about the same in 2018 as in 2017, with a typical mix of 55% stocks, 21% bonds, and 15% cash and alternatives.
“Millennials reduced large amounts of cash held in 2017 and put it into stocks, as they are feeling confident in the U.S. economy, solid corporate earnings as well as technology-specific growth,” Quinlan says.
All age groups said they owned impact investments out of a belief that it was the right thing to hold corporations accountable.
The biggest barrier to impact investing is the desire to keep philanthropic and investing goals separate, the same as in previous years, according to the report. Another main reason is the perception that impact investments have lower returns, as well as the fact that the impact they have is difficult to measure.
However, most of those committed to impact investing feel satisfied with its performance. About 70% of high-net-worth individuals say the return on their ESG investments has met or exceeded their expectations, while 62% believe their investments have made a positive impact as expected.