- Retail investors are split down the middle by generation over their favourite alternative assets, according to a note from JPMorgan this week.
- Older investors are more inclined towards gold, while millennials are flocking to bitcoin, analysts from the bank said.
- “The two cohorts show divergence in their preference for ‘alternative’ currencies,” a team of analysts led by Nikolaos Panigirtzoglou wrote.
- Gold hit a record high this week as it shot past $US2,000 an ounce. Last week, bitcoin hit a year-high crossing the $US11,000 level as the US dollar weakens.
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Retail investors are split down the middle by generation over their favourite alternative assets, according to a note from JPMorgan this week.
“The two cohorts show divergence in their preference for ‘alternative’ currencies,” a team of analysts led by Nikolaos Panigirtzoglou wrote. “The older cohorts prefer gold while the younger cohorts prefer bitcoin.”
Both gold and bitcoin exchange-traded-funds have experienced strong inflows in the past five months, as both age groups see the potential in alternative currencies, the note said.
Millennials also have a particular fancy for stocks, especially ones in technology, but the older investors are selling equities, the team wrote in a note dated August 4.
“Younger cohorts of US retail investors show little interest in bond funds,” they said, adding that “they also avoid equity funds, preferring to invest in equities directly by buying individual stocks, especially tech stocks.”
“The older cohorts continued to deploy their excess liquidity into bond funds, the buying of which remained strong during both June and July,” they wrote.
The parallel buying of US equities and bitcoin by millennials has increased the correlation between bitcoin and the S&P 500 index since March, JPMorgan said.
The “simultaneous flow support has caused a change in the correlation pattern between bitcoin and other asset classes, with a more positive correlation between bitcoin and gold but also between bitcoin and the dollar as US millennials see bitcoin as an ‘alternative’ to the dollar,” the note said.
Gold hit a record high this week, climbing above $US2,000 per ounce for the first time ever as traders piled into the so-called safe haven precious metal and on hopes of further US stimulus measures.
“Acting as a measure of market anxiety, gold smashed through the $US2,000 per ounce ceiling for the first time in history overnight – four and a half months on from the sub-$US1,500 lows seen before the coronavirus crisis took hold of the West,” Connor Campbell, a financial analyst at SpreadEx, said in a note.
Last week, bitcoin crossed the $US11,000 level as the millennial-favourite traded near its highest level in almost a year amid US dollar weakness and a broadening shift to alternative assets.
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