Capital Group CEO wants Gen-Z investors to think past ‘hobby investing’
Capital Group Chief Executive Mike Gitlin wants Gen Z investors to step back from battle-focused commodity trading and start thinking long-term, as the asset management industry races to win over a generation with fundamentally different investment rules.
Answering a viewer question CNBC’s Converge Live conference In Singapore on Wednesday, Gitlin said young investors should approach the markets with a long-term wealth-building mindset rather than “hobby investing” and add personal interests to one’s portfolio.
The question came from a father in the audience who said his teenage children objected to the gold-to-oil plan and accused it of “profiting from war.” He added that an informal survey at his children’s school found that nearly 80% of his Gen Z peers shared the same reluctance.
Gitlin, who leads Capital Group, the world’s largest active investment manager with $3.3 trillion in assets under management, said whether gold or oil, “neither is where they should be thinking about where they’re going to put their money for the next 75 years.”
“Trying to time commodity markets is super, super hard for professionals, let alone 13-year-olds. Get them interested in the broader markets,” he said.
Instead, Gitlin urged young investors to build a “paper portfolio” of diverse stocks, conduct due diligence research with the help of AI tools, and focus on fundamentals rather than market fluctuations.
“Get them interested in stocks and bonds, broader macro conditions and what’s going on in the world,” he added.
The comments come against a backdrop of what researchers describe as deepening disillusionment among young investors and growing distrust of asset management institutions.
according to World Economic Forum’s Global Retail Investor OutlookGeneration Z’s trust in traditional financial institutions has fallen in the last two years; Nearly 20% of non-investors cite distrust in financial institutions as a reason for staying out of markets altogether.
A small but growing group has adopted what is known as: “fiscal nihilism” a complete rejection of traditional wealth-building stages. The majority of young investors surveyed by WEF also said they would invest more if they had more confidence in investment platforms.
‘Super resilient’ markets
Gitlin’s remarks come against a backdrop of striking market resilience, with the US-Israeli war with Iran dragging on for almost two months and an uncertain outlook for a permanent ceasefire.
People are looking three to five years ahead to earnings [and] Companies are becoming more profitable. We need to look at this in the longer term.
Mike Gitlin
CEO, Capital Group
“Markets are super resilient,” Gitlin said. “People are looking three to five years ahead—to earnings, to companies becoming more profitable. You have to think about this longer term.”
Notably, some of the world’s best-performing markets this year have been major energy importers despite the disruption to shipments through the Strait of Hormuz. South Korea’s Kospi index increased by 50% and Taiwan’s index increased by 30%, surpassing the 3% rise of the S&P 500.
Gitlin warned that the critical wild card is how long oil prices will remain high. “The only ‘if’ in all of this is how long the oil will swell,” he said. “If oil stays high for a long period of time, you get higher inflation and lower growth, and markets react accordingly.”
