According to a recent national survey of investors done by research firm Roper Starch Worldwide, culture can influence investment decisions. Conducted for Ariel Capital Management Inc., a black-owned and operated mutual fund company in Chicago, the study found that blacks invest more conservatively and expect larger returns in a shorter time period than do nonblacks. The study also found that while stock and mutual fund investments are at an all-time high, most blacks do not invest in them.
The reasons behind blacks' investment decisions may have to do with perception of risk. Black investors tend to be comfortable with a moderate amount of risk but typically don't want to tie up their money for a long time, says Stacy Bereck, senior project director with Roper Starch. And that, in turn, may affect the types of investments they make.
Educating employees about retirement plans could make a difference in where blacks invest, says Mellody Hobson, a senior vice president with Ariel. "Mutual funds and stocks are demonstrated wealth creators," says Hobson. "It's important to help employees understand that long-term investors have the opportunity to withstand the volatility of the stock market."
Offering a black-owned mutual fund may also increase the comfort level of black investors, speculates Hobson. There are about 12 black mutual funds, Hobson says, but Ariel is the only one listed in daily newspapers (to get listed, funds must manage at least $30 million in assets or have at least 1,000 shareholders).
To obtain a copy of Ariel's free guide to mutual fund investing, call (800) 29-ARIEL.