Millennials, often defined as individuals born between 1981 and 1996, are significantly transforming the investment landscape. Embracing a modern investment tool known as fractional investing, they are diversifying their portfolios and steadily becoming the dominant demographic in the alternative investment space. According to a report from Grip Invest, a popular digital investment platform, millennials comprise approximately 60% of all investors in fractional investments.
For the unversed, fractional investing is a concept that allows individuals to invest in high-value assets by purchasing a fraction or a share of the asset. In this kind of investment, one doesn’t need to wholly own an asset to gain from its potential appreciation or earning potential. This can range from pieces of high-end artwork and vintage cars to commercial real estate and shares of tech giants.
A recently published study, christened ‘Gripping the Boom: Millennials in Fractional Investing,’ provides valuable insights on how the principle of fractionalisation has revolutionized the engagement of retail investors in areas such as private equity, art, and collectibles. This innovative approach has allowed investors to delve into new asset categories. Of particular note is that 60 percent of all transactions on the Grip Invest platform are facilitated by individuals below 40 years, with some as young as 21 looking into fractional ownership of assets promising high yields.
These indicators signal that younger investors are expressing a keen interest in playing an active role in managing their investments. The report also pointed out that 77 percent of users preferred to conduct their research, confirming this hands-on trend.
Despite a streak of caution marking their investment approach, these investors are hedging significant amounts in their exploration of fractional investing. The average amount dedicated by an investor on the Grip Invest platform is over Rs 1,00,000. This trend confirms the credibility of fractional investing as a substantial financial strategy.
Additionally, the growing popularity of fractional investing is not confined to millennials only. Generation X also contributes to 20 percent of investments made on the platform.
Nikhil Aggarwal, CEO and Founder of Grip Invest, said “Our report reveals a fascinating shift – Millennials are embracing alternative investments due to fractionalisation and market volatility. Grip Invest reflects this, experiencing 20 per cent month-on-month growth on the platform. A considerable strata of retail investors are opting for fractionalisation, due to Sebi reducing ticket sizes by 90 per cent and enhanced digital access.”
Over the past two years, there has been a considerable increase in interest, particularly amongst millennials, who are shifting from traditional risk-averse investment strategies to ones that hold better risk-adjustment potential. This notable rise in interest and adoption has thrust alternative investments into mainstream focus.
This shift can be primarily attributed to two factors. The first is the unpredictability of market volatility, a situation that has gradually nudged investors towards alternatives that promise better risk management. Secondly, the increasing democratisation of the investment landscape has allowed a broader range of investors to venture into the alternative investment arena. This democratization is largely due to significant regulatory reforms such as those by the SEBI, which have reduced investment ticket sizes by an impressive 90%, thereby enhancing digital access to alternative investments for the masses.
Grip Invest, a platform that provides access to alternative investment options, stands as a testament to this burgeoning interest. Currently, the platform boasts over 26,000 investors who have actively used the platform at least once.