Sberbank appeals to younger clients.
Sberbank and it’s Wealth Management Block which provides investment products to end users including retail clients saw a large increase in first time investments made by young people.
The firm noticed that interest in products from clients aged between 18 and 30, including life insurance and mutual funds has more than doubled in the last 12 months. A large majority, over 55% of these on average across the product range have invested for the first time.
Having analysed profiles of clients’ purchasing habits over the last 12 months the banks Wealth Management division highlighted what appears to be an emerging trend amongst the growing 18 to 30 client base.
It highlighted 57% growth for it’s younger client base in Life Insurance products and suggested 55% of these clients were investing for the first time.
The press release issued by Sberbank on the 12/10/2018 in outlined below:
Young people are more interested in investing
• The number of young people who made their first investment in investment life insurance, mutual funds and trust management strategies in 2018 has doubled.
• The majority of young clients are men; their average age is 26.
12 October 2018, Moscow – In 2018, Sberbank has noticed sharp growth of young people’s interest in different investment tools: compared to 2017 the number of clients aged 18-30 who purchased investment life insurance policies or invested in mutual funds and trust management strategies this year has more than doubled. At the same time, 57% of young clients of Sberbank Life Insurance and more than 55% of young clients of Sberbank Asset Management have invested for the very first time this year.
Senior Managing Director and Director of the Wealth Management Block of Sberbank Dmitry Gorshkov:
“We have analysed the profiles of clients who purchased different investment products of the Wealth Management Block in 2018, and learned about a high level of interest from young investors. Young people are less likely to spend money without thinking about it first, and instead manage their finances in a smart way and create financial plans. The sums that young people invest are still not that large, but the signal that the youth is ready to invest which we have received in 2018 is more important to us.”
Sberbank Life Insurance’s total amount of invested funds in 2018 has more than doubled and is RUB 17 bln. For nine months of 2018, the average bill for investment life insurance at Sberbank Premier is RUB 568,468 and at Sberbank First – RUB 3,877,312, compared to last year’s results the average amount has increased by about 25%.
The most popular rouble investment life insurance strategy in 2018 among young people is New Technology, which was chosen by 69% of young investors, and Global Bond Fund, which proved to be interesting for 20%.
Head of Strategy Selection at Sberbank Life Insurance Division Boris Borzunov:
“With investment life insurance, a client makes a single investment for a long-term period (3-7 years) and chooses an investment strategy from the wide range of base assets offered by the insurance company: bonds, stocks, commodity market, real estate and others. The major benefit and key difference of investment life insurance, compared to other financial tools, is its complete security of capital. It means that the client will receive their initial investment back even if the chosen base asset loses value. Investment life insurance can have good potential profitability if the situation on the stock market is favourable. Thus, investment life insurance is becoming a comfortable tool for beginner investors who don’t want to risk their investments or don’t have enough knowledge to enter the stock exchange independently.”
The size of assets of young investors in Sberbank Asset Management is RUB 3.9 bln and has increased by RUB 1.4 bln since the beginning of the year.
The most popular individual investment account (IIA) strategy among young people is Rouble Bonds, which invests in sovereign debt securities, as well as bonds of the largest Russian issuers. IIAs are not only the most popular tool by number of clients, but also by investment volume: 19% of the total volume for this year. In second place is Ilya Muromets, a low-risk bond fund. Its investors can invest in bonds issued by the government and thdre largest Russian companies.
The most popular equity funds are Global Internet, which invests in the stocks of leading online companies and Natural Resources, which invests in the largest Russian natural resources companies and producers of steel and mineral fertilisers. These funds received more than RUB 120 mln of investment from young people in 2018.
Managing Director of Sberbank Asset Management Vasily Illarionov:
“Young people have higher so-called human capital, the sum of the future earnings. They have more time to learn and try out investing. The low amount needed to enter mutual funds, just RUB 1,000, the simplicity of working with them, and the ability to invest remotely through a smartphone app are changing young people’s views of the stock market. This is no longer something distant and difficult to understand, but a savings tool that can and should be used.”
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Danny Deegan is the Editor and proprietor of eurasianmarket.com. Born in the UK, currently working in financial services with an emphasis on equity investments and forex trading.