Watch out for equity gambles in the guise of ESG investment

There is sparse evidence to support stocks picked by CEO gender

- MERRYN SOMERSET WEBB

Last year, the UK's Financial Conduct Authority issued a warning about investment apps: The "game-like elements" some of them have-badges, points, leader boards, fun post-trade messages-might contribute to "problematic, even gambling-like, investor behaviour." There's new legislation on its way, it said, so firms relying on gamification to get trading going might want to review what they did.

That's an implicit threat from the FCA, so I imagine there is conversation underway about what level of gamification is a good thing (it engages a new audience) and what is bad (it makes users borrow money and use it stupidly). But if the regulator is worried about an epidemic of stock gambling, I wonder if it's looking in the right place. The UK's young, after all, seem remarkably sensible with investments: They mostly have auto-enrolment pensions and seem attracted to low-cost index funds.

Vanguard notes that 74% of UK clients signed up last year were under 45 and 41% were under 30. Vanguard products are fine, but offers no dopamine hits. Hargreaves Lansdown, the UK's best-known investing platform (with no in-app points) has also reported a rise since the pandemic in younger investors opening accounts. Its users aren't looking to top trader boards.