Newspaper Page Text
Survey reveals blacks and whites
differ in approaches to investing
e CHICAGO
L‘j Ariel Mutual Funds recently released
ts of the results of the first national
vestment survey of African-Americans.
The survey, conducted by the indepen
‘dent research firm, Roper Starch World
‘wide, found that African-Americans rely
on conservative investment vehicles and
risk-averse strategies, while looking for
higher returns, and are more likely to seek
the advice of a financial planner.
. When compared to non-African-Ameri
cans, African-Americans strongly favor
| diverse investment firm management, so
“cially responsible investments and com
munity involvement. African-American
- women are more likely to make household
financial decisions.
} The survey found that African-Ameri
cans and non-African-Americans invest
! similar portions of their incomes (11 per
cent vs. 12 percent); however, African
' Americans, despite their higher invest
- ment goals, achieve less return on invest
- ment because they use more conservative
- vehicles, such as savings accounts.
Mellody Hobson, senior vice president
of Ariel Mutual Funds, said “Although
-investments in stocks and mutual funds
are at an all-time high, the majority of
African-Americans do not invest in these
vehicles. Webelieve the African-American
market, with approximately $36 billion in
disposable income, is a huge, untapped
group, presenting tremendous potential
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Accordingtothesurvey, African-Ameri
cansaremoreconservativeand risk-averse
in their investment vehicles than non-
African-Americans. They have less diver
sified investment portfolios and, on aver
age, invest money in 3.3 types of vehicles,
compared to 4.1 for non-African-Ameri
cans. African-Americans trail non-Afri
can-Americans in their ownership of in
terest-bearing checking accounts (31 per
cent vs. 45 percent), money market ac
counts( 13 percent vs. 26 percent), mutual
funds (22 percent vs. 35 percent) and stocks/
bonds (27 percent vs. 38 percent).
When they do invest, African-Ameri
cans want bigger payoffs in a shorter
amount of time. African-Americans look
for an annual return of 14.6 percent com
pared to 11.2 percent for non-African-
Americans. They also have shorter invest
ment horizons. On average they are will
ing to invest their money for six years
compared to non-African-Americans who
are willing to invest for approximately 7.3
years.
In choosing, investment institutions,
both groups ranked investment compa
nies’ strongperformance record, good repu
tation and easy access to money as critical
factors when investing.
The most dramatic difference between
the groups was the desire for an invest
ment firm that has diverse management
intermsofrace, religion and gender. Fifty
&9
one percent of African-Americans said di
versity was important compared with only
10 percent of non-African-Americans. Afri
can-Americans alsoplaced agreaterempha
sis on socially responsible investments and
community involvement. They are twice as
likely to look for companies that offer so
cially responsible investments and three
times more likely to seek out companiesthat
are actively involved in the community.
Women are the decision makers for in
vestment choices and savings options in 37
percent of African-American households.
“Even among married couples, African-
American females are still more likely to
play the decisive role (21 percent vs. 10
percent),” said Hobson.
African-Americans are less likely to rely
on friends or family members (31 percent
vs. 39 percent), and accountants (23 percent
vs. 29 percent) when making investment
decisions. Also, they are more likely to seek
the advice of a financial planner (54 percent
vs. 46 percent), rely on brochures and litera
ture from investment companies (32 per
cent vs. 26 percent), employer provided in
formation (32 percent vs. 25 percent) and
seminars (19 percent vs. 10 percent) than
non-African-Americans.
Roper Starch Worldwide conducted the
research on behalf of Ariel Mutual Funds.
The findings are based on a survey com
pleted by 974 Americans in late 1996. The
survey included an over-representation of
445 African-Americans.
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