Investment Trends Among Millennials: TDFs and ETFs
Target Date Funds (TDFs) are gaining popularity among the millennial cohort, particularly within the 20s and 30s age group. These funds adjust asset allocation automatically based on the target retirement date, with a higher equities focus seen in high-vintage TDFs being favored. In South Korea, significant inflows into 2050 TDFs have been observed, highlighting young investors' willingness to actively manage their assets for a distant retirement. In the U.S., a substantial portion, approximately 75%, of the retirement assets for those in their 20s is invested in TDFs, indicating these young investors value the convenience of automated asset rebalancing, especially due to limited investing experience.
Conversely, South Korean retirement investors are shifting funds from U.S. long-term bond ETFs to major index and AI-related ETFs in pursuit of reduced volatility and stable returns. ETFs tracking the S&P 500, Nasdaq 100, as well as AI and high-quality bond ETFs, have ranked high in net purchases, reflecting strategic maneuvers by investors to hedge against market volatility. This shift signals potential diversification in investment products and strategy adaptations in response to evolving market conditions.
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