Capital Group Chief Executive Mike Gitlin wants Gen-Z investors recoiling from war-driven commodity trades to start thinking long-term, as the asset management industry races to win over a generation with fundamentally different rules of investing.
Responding to an audience question at CNBC’s Converge Live conference in Singapore on Wednesday, Gitlin said younger investors should approach markets with a long-term wealth-building mindset, rather than “hobby investing,” adding personal interests to one’s portfolio.
The question came from a father in the audience who said his teenage children had objected to his plan to rotate from gold into oil, denouncing it as “profiting from war.” He added that an informal survey at his children’s school found roughly 80% of Gen-Z peers shared the same disinclination.
Whether gold or oil, “neither of them is where they should be thinking about where they’re going to invest their money for the next 75 years,” said Gitlin, who leads Capital Group, the world’s largest active investment manager with $3.3 trillion in assets under management.
“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 younger investors to build a “paper portfolio” of several stocks, conduct due diligence research, aided by artificial intelligence tools, and focus on fundamentals rather than market swings.
“Get them interested in stocks and bonds, the broader macro conditions, what is happening in the world,” he added.
The comments come against a backdrop of what researchers describe as deepening disillusionment among younger investors and rising mistrust in wealth management institutions.
According to the World Economic Forum’s Global Retail Investor Outlook, Gen-Z’s trust in traditional financial institutions has fallen over the past two years, with nearly 20% of non-investors citing distrust of financial institutions as a reason for staying out of markets entirely.
A small but growing cohort has embraced what has become known as “financial nihilism,” a rejection of traditional wealth-building milestones altogether. The majority of those young investors surveyed by WEF also said they would invest more if they had more trust in their investment platform.
‘Super resilient’ markets
Gitlin’s remarks came against a backdrop of striking market resilience as the U.S.-Israel war with Iran dragged on for almost two months, with a murky outlook for a permanent ceasefire.
People are looking three to five years forward — to earnings [and] companies becoming more profitable. You have to look through that for the longer term.
Mike Gitlin
CEO, Capital Group
Global equities have reclaimed pre-war levels, with the MSCI World Index erasing a 3.29% post-conflict slump to trade nearly 2% above its March 2 close — the first session after hostilities broke out — as investors unwound geopolitical risk hedges even as the conflict remains unresolved.
“The markets are super resilient,” Gitlin said. “People are looking three to five years forward — to earnings, to companies becoming more profitable. You have to look through that for the 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 is up 50%, and Taiwan’s benchmark has gained 30% — far outpacing the S&P 500’s 3% advance.
The critical wildcard, Gitlin warned, is how long oil prices stay elevated. “The only ‘if’ in all of this is how long oil is going to be inflated,” he said. “If oil stays elevated for a long period of time, you’re going to have higher inflation and lower growth — and then markets would react accordingly.”