ESG has dominated advisors’ minds when it comes to looking at the current generation of young prospective clients. It remains a popular investment approach for millennial and Gen Z clients per surveys. ESG isn’t the only theme that could be important for Gen Z clients particularly, however. According to recent survey data, Gen Z’s approach to the stock market may suggest they could be the active ETF investing generation.
Per a recent survey by Bankrate, nearly 9 out of 10 Gen Z stock investors actively engaged with their stock portfolios this year. Based on Bankrate’s data, that stood out as higher than 38% of Gen X investors and higher, even, than millennials at 68%. While there is some common sense to that gap as investors closer to retirement may embrace more caution, the Gen Z number still stands out.
Why might Gen Z investors be so actively engaged relative to older generations? Technological changes bringing investors closer to their portfolios via apps could offer one reason. The popularization of cryptocurrencies with younger investors could also have drawn Gen Z investors to the idea of quickly moving between various stocks, as well. Whatever the case, those potential Gen Z clients may want to consider active ETF investing instead.
The Gen Z Case for Active ETF Investing
Active ETF investing offers a similarly nimble and responsive approach to the stock market but adds significant managerial expertise and experience. Instead of buying or selling a stock on an app, the ease of which sometimes may invite rash decision-making, active ETF managers apply significant scrutiny and fundamental screens while retaining the same investing agility. That could appeal to Gen Z investors.
The ability to trade in and out of active ETFs quickly, as well as their tax advantages, may also appeal. Whatever the case, advisors may want to keep an eye out for how active ETF investing could find a very receptive audience in the next way of clients. With active ETFs seeing broader interest in 2023, now could be the time for younger investors to eye active strategies, too.
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