Generation X women are mimicking the risk-cautious investment habits of retirees, a problematic trend considering they are in their prime accumulation phase.
The pattern was revealed in the Colonial First State Global Asset Management/University of Western Australia Business School Equity Preference Index, which measures flows in and out of managed funds from non-advised investors over a six month period (to June 30 2014).
It found while generation Y women were meeting expectations with their strong appetite for equities (EPI 1300), generation X women were falling significantly short (EPI 46).
"Gen Y women are investing more appropriately for their age group than Gen X women, who are behaving more like retirees in terms of risk appetite," CFSGAM Senior Analyst, Economic and Market Research, Belinda Allen, said.
She said the trend "could be a problem long-term".
"They're exchanging short-term risk in terms of market volatility for longer-term risk in terms of not meeting their retirement objectives.
On the other hand, Gen Y women now have a higher preference for equities than men, at 1300 points for women versus 953 for men over the period, something Gen X women may want to consider," Allen said.
Generation X men reduced their exposure to equities by nine per cent in the first half of the year, which Allen said could stem from an increased appetite for investment property.
"Since March 2011, investment lending has grown by $A4.4bn or 85 per cent, as expectations have risen over capital gains in the residential property market in Sydney and Melbourne in particular."
Overall though, men still had a higher preference for equities than the women of their generation.
Allan said there were some signs that women across both generations were slowly increasing their appetite for growth assets in line with favourable market conditions.
"We have seen some early signs of a turnaround in investment in equities for Gen X women, who have been more responsive than males in taking advantage of changes in market conditions and events during 2013 and into 2014 across all age groups. These women may finally be heeding the message to save more, save earlier and invest in higher growth assets."
