Jonathan Bell Lovelace believed that fundamental research is essential to achieving superior long-term investment results. The small company he founded in 1931 has grown into one of the world’s most respected financial institutions.
LOS ANGELES, September 28, 2016 – Nearly two-thirds (63%) of Gen Xers are kept up at night thinking about financing their retirement, and one in three is worried they’re not earning enough money to be able to invest for the future, according to a survey by American Funds, a family of mutual funds from Capital Group, one of the world’s leading investment management firms.
“After experiencing the dot-com bust, the global financial crisis and the housing collapse, as well as stagnant wage growth during their formative adult years, Gen Xers — or Generation AnXious — are wary about their financial future,” said Heather Lord, senior vice president and head of strategy and innovation at Capital Group. “Perhaps because of these concerns, Gen Xers long to do better than the average market and say actively managed funds can help them reach these goals.”
While investors across all three generations believe it is important to strive for superior results – and to limit losses during market downturns — the survey identified a low level of awareness about the downside risks of index funds.
“Every generation is interested in achieving better investment outcomes over time and limiting losses in market downturns, combined with low fees,” said Lord. “But each generation has blind spots around index funds, which experience the full downside of market drops. Baby Boomers, especially, are unaware of those risks – and they’re the ones with less time to rebuild their nest eggs from a market downturn.”
Wisdom of Experience: Lessons Learned From Millennial, Generation X and Baby Boomer Investors surveyed over 1,200 U.S. adults, focusing on Millennials (21-36 years old), Generation X (37-51 years old) and Baby Boomers (52-70 years old), to understand their perspectives on a range of investing and retirement issues.
Key findings include:
All three generations understand that a well-designed portfolio can do better than average, but most don’t know what to look for when trying to identify funds that can deliver long-term above-average market results.
That said, 64 percent of investors said they would feel more comfortable investing in a fund where a significant amount of the manager’s own money is invested alongside them, and most agree that such funds are more likely to do well for investors.
Boomers have the lowest expectations about future market returns, but they have the most optimistic outlook on their retirement. For Millennials and Gen Xers, it’s the opposite — they are more bullish about the market, but less so about their own retirement.
Also, within each demographic, gender expectations differ: Men are a lot more optimistic than women about the investment outlook in the next 10 years, while women have a more positive outlook than men when it comes to the next two or three decades.
Each generation has taken the need to start saving early more seriously. Fifty-nine percent of Millennials began saving for retirement before age 25, compared to 42 percent of Gen Xers and 28 percent of Boomers. And a quarter of Millennials believe children born today should start saving for retirement even before their 18th birthday.
For additional information and the full report, click here
Since 1931, Capital Group has been singularly focused on delivering superior results for long-term investors using high-conviction portfolios, rigorous research and individual accountability. Today, Capital Group manages more than US$1.39 trillion in equity and fixed income assets for millions of individual and institutional investors around the world.*
The Capital Group companies manage equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.
*As of December 31, 2015
© 2016 American Funds Distributors, Inc.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses or the collective investment trust's Characteristics statement, which can be obtained from a financial professional, Capital or your relationship manager, and should be read carefully before investing.