Financial services is by far the most owned sector among retail investors, according to data from the latest Retail Investor Beat (RIB) from trading and investing platform eToro.
In the study of 10,000 retail investors across 12 countries, 61% say they hold financial services stocks, with technology the second most owned sector at 40% and energy third at 35%. All three industries have been in focus over the last 18 months with energy and tech stocks outperforming, and financial services stocks expected to build momentum as the world’s second biggest and one of the cheapest sectors benefits from the combination of lower interest rates and stronger loan growth.
The average retail investor portfolio is also likely to include cash, with 69% of investors owning cash assets such as savings accounts, whilst stocks listed in an investor’s local market rank second (49%) amongst asset classes, followed by domestic bonds (34%). The popularity of cash assets has continued to increase this year according to the RIB data, as high-for-longer 5% risk-free savings rates have been widely available in many major economies.
When retail investors in the RIB were asked which sector they are most likely to up their investments in, tech and financial services once again topped the list, selected by 18% and 12% of respondents respectively, followed by a diversified mix of real estate (9%), healthcare (8%) and energy (8%).
Amongst asset classes, crypto is considered the biggest opportunity, with 15% of investors stating that they would prioritise the world’s top-performing asset class over others going forward. This was followed by cash assets (14%), locally-listed stocks (13%), internationally-listed stocks (9%), commodities (8%), domestic bonds (7%), FX, (5%), alternative investments (4%) and foreign bonds (4%).
Commenting on the data, eToro Analyst Sam North, says:
“Whilst markets have continued to deliver for investors in 2024, the widespread availability of highly attractive savings rates means that cash will remain the dominant asset class amongst global retail investors, at least for a few more months. However, with the ECB recently cutting rates and other major central banks expected to follow soon, the scales will soon tip more in favour of equities and other asset classes like real estate.
“The average global retail investor is also well-positioned for what’s likely to be a strong period for financial services companies, with this sector by far the most common feature of investor portfolios around the world. What the data also showed is that, despite the fast-paced globalisation of financial markets in recent years, there remains a major home bias towards locally-listed stocks.”
The data shows a significant divergence of investing intentions when looking at retail investors from different countries. In the UK for example, one in four (25%) investors say they will prioritise cash over any other asset class in the coming months, head and shoulders above crypto (11%), local stocks (8%) and international stocks (10%). A similar trend is evident in the US and France, whilst in Germany and Spain, it is the reverse, with crypto ranking top and cash third when it comes to investing intentions.
This trend largely chimes with crypto ownership in these countries. In Spain and Germany, 38% and 32% of retail investors hold crypto, respectively. This drops to 25% in the UK and 27% in the US.
North adds:
“We see a real disparity globally when it comes to the asset classes which investors plan to prioritise in the months ahead. This may in part be down to the attractiveness of savings rates in different countries. In the UK and the US, for example, where savers can still secure rates of over 5%, this asset class remains the priority. However in Germany and the Netherlands, where savers are unlikely to get as much as 4%, crypto and equities are the focus.”
The latest Retail Investor Beat was based on a survey of 10,000 retail investors across 12 countries and 3 continents. The following countries had 1,000 respondents: UK, US, Germany, France, Australia, Italy and Spain. The following countries had 600 respondents: Netherlands, Denmark, Poland, Romania, and the Czech Republic.
The survey was conducted from 15 May – 5 June 2024 and carried out by research company Opinium. Retail investors were defined as self-directed or advised and had to hold at least one investment product including shares, bonds, funds, investment ISAs or equivalent. They did not need to be eToro users.
