Millennials are shifting away from the traditional 60-40 stock and bond investment strategy, instead allocating a larger portion of their portfolios to alternative assets like private equity, venture capital, and private credit.

Millennials are shifting away from the traditional 60-40 stock and bond investment strategy, instead allocating a larger portion of their portfolios to alternative assets like private equity, venture capital, and private credit. According to a Goldman Sachs survey of 1,000 high net worth individuals, millennials dedicate about 20 percent of their portfolios to alternatives, which is double the proportion seen in Gen X, boomers, and the silent generation.

The survey also found that millennials are less invested in public equities compared to older generations, with only 27 percent of their portfolios in stocks versus nearly 50 percent for baby boomers. Millennials view alternatives as offering better exposure to growth industries, partly due to the decline in public companies and longer periods before startups go public. The generation is also more comfortable with the risks and lack of liquidity associated with alternatives, and they rely more on financial media for information than on financial advisors.

Millennials more likely to invest in alternatives

Welcome back. Well, a traditional 60-40 portfolio of stocks and bonds has been one of the most widespread investing strategies for decades. Millennials are opting for a different approach. Leslie Picker here is here to tell us what that approach is. Leslie. Yeah, David, apparently stocks and bonds are for boomers. Millennials are way more invested in alternatives than the older cohorts. The generation with birthdays between 1981 and 1996 has about 20 percent of their portfolios allocated to all areas like private equity, venture capital and private credit. That proportion is double that of Gen X boomers and the silent generation, according to the results of a Goldman Sachs survey of a thousand high net worth individuals. Millennials are also shunning public equities relative to older cohorts with just 27 percent of their portfolios in stocks compared with nearly 50 percent for baby boomers. In fact, 54 percent of millennials surveyed perceived alts as the best exposure to growth industries, a response to the disappearing number of public companies and startups staying private for longer. This generation, of course, came into adulthood during the Internet and now AI booms, enriching many of their tech savvy peers. Millennials were also early in their careers when the financial crisis struck, which may have something to do with why they perceive equities to be riskier than older generations as well. And as we think about our role in the media, the survey asked respondents how they get information about alternatives. And the number one answers, financial TV news. Really? Pat on the back there. I was surprised by that, too. But it's encouraging. Important role there. It's encouraging. Which is why it's so important that you're covering it, actually, on CNBC. Yes, because there is one of the big complaints about alternatives is that there's just a lack of information, a lack of transparency. Millennials clearly more comfortable with that, but they're getting their news from the media far more than any other source, including financial advisors, by the way. Right now. Also used to be a lack of liquidity. There are any number of different products being constructed that are going to create at least some form of liquidity, not necessarily on a daily basis. But do they understand what that means? Yeah. I mean, in terms of their understanding of the liquidity element of just the overall information asymmetry element of the fee element, those are all complaints that people have made about why not to get into alternatives. It seems like at this juncture, millennials are just more comfortable with that notion than the older generations and even perceive equities, which are liquid, to be riskier. So I mean, I think liquidity itself is not an indicator of why they should shun a certain asset class over another one. Right. And that's before any of this broader exposure has been formalized. Yeah, exactly. Exactly. And it also has implications for just the next marginal buyer as these generations continue this shift. If it were to continue, what does that mean for stocks? If the marginal buyer is far more invested in the private markets and the public markets. Marginal buyers are good. We like marginal buyers. Yeah. Good thing there's still a lot of boomers out there. Exactly. Thank goodness for the boomers.

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