In the years following the subprime mortgage crisis, mutual fund investors have enjoyed the equivalent of a tax holiday. Most funds have had multiple years of capital losses on their books that they have used to offset income and gains, thereby greatly reducing or eliminating the need to make taxable distributions.
Fears over slowing global economic growth, geopolitical turmoil and the potential for the Federal Reserve to raise interest rates have taken equity investors on a rollercoaster ride during the past few months. Indeed, in some days, broad-based equity indexes have declined more than 2% as pundits have opined that Europe may be on the verge of a recession. The rise of the Islamic State in Iraq and Syria combined with concerns over Russia’s annexation of Crimea and resulting sanctions against the country have also weakened investor sentiment.
Millennials, or the generation of individuals born between 1980 and the early 1990s, are typically laden with debt, underemployed, distrusting of financial advisors and highly risk averse when investing. Despite those characteristics, they are attractive prospects for financial advisors.