Generation X (ages 35-49) is the age demographic most at risk of not achieving long-term stability due to a low appetite for growth investments, according to recent research from Colonial First State Global Asset Management (CFSGAM).
CFSGAM's UWA Business School Equity Preference Index (EPI) shows that investors have been substituting the risk of capital volatility for longevity risk during the accumulation phase.
"Since the last index report in January 2012, we've seen a further decline in preference for equities for investors aged 35-49 years, placing this demographic at increased risk of not saving enough for retirement," CFSGAM Investments Markets Research senior analyst Belinda Allen said.
"At this stage, 35 to 49 year-olds are showing no signs of neutralising their preference for equities, compared to other age brackets. This is a real surprise, given they are in their peak accumulation phase.
"This group is at risk of impacting their long-term financial stability if preference for growth assets does not return over time or other measures, including increasing savings levels, are implemented," she said.
Ms Allen cited lifestyle choices and a change in family circumstances for the low preference for equity allocation. Low interest rates encouraging debt repayments as a priority could also be attributable.
Overall, the report found that across all age groups, investor sentiment continues to play a large role in the Australian equity market.
It showed that while there has been some sign of neutralisation of preference for equities since the last report, it is too early to suggest this is a permanent move.
