eToro research shows that financial services is the sector in which retail investors have the largest share

Financial services are by far the sector most scrutinized by retail investors, according to the latest Retail Investor Beat (RIB) research from the eToro trading and investment platform.

In a survey of 10,000 retail investors in 12 countries, 61% say they own shares of financial services companies, with the technology sector being the second most held sector at 40% and the energy sector the third most held at 35%. All three industries have been in focus over the past 18 months, with energy and technology stocks outperforming and financial services stocks expected to gain momentum as the world’s second-largest and cheapest sector benefits from a combination of lower interest rates and stronger loan growth.

The average retail investor’s portfolio is also likely to contain cash – 69% of investors hold cash assets such as savings accounts, while an investor’s local listed shares rank second (49%) among asset classes, followed by domestic bonds ( 34% ). According to RIB data, the popularity of cash assets continues to grow this year as high and 5% risk-free savings rates for longer periods are widely available in many major economies.

When retail investors in RIBs were asked which sector they were most likely to increase their investment in, technology and financial services again came first, chosen by 18% and 12% of respondents respectively, followed by diversified real estate (9%). health care (8%) and energy (8%).

Among asset classes, cryptocurrencies are considered the biggest opportunity, with 15% of investors saying they would prioritize the world’s best-performing asset class over others in the future. This was followed by cash assets (14%), locally listed shares (13%), internationally listed shares (9%), raw materials (8%), domestic bonds (7%), foreign exchange currencies (5%), alternative stocks investments (4%) and foreign bonds (4%).

Commenting on the data, eToro analyst Sam North says:

“While markets continued to deliver strong performance for investors in 2024, the widespread availability of very attractive savings rates means cash will remain the dominant asset class among global retail investors for at least the next few months. However, with the ECB recently cutting interest rates and other major central banks expected to soon follow suit, the scales will soon tip more in favor of stocks and other asset classes such as property.

“The average global retail investor is also well positioned for what is likely to be a strong period for financial services companies, with the sector being by far the most common feature of investor portfolios around the world. The data also showed that despite the rapid globalization of financial markets in recent years, there remains a strong domestic bias towards listed shares.”

The data shows a significant divergence in investment intentions among retail investors from different countries. In the UK, for example, one in four (25%) investors say they will prefer cash over any other asset class in the coming months, primarily cryptocurrencies (11%), local shares (8%) and international shares (10%). . %). A similar trend is visible in the US and France, while the opposite is true in Germany and Spain, where cryptocurrencies rank first and cash ranks third when it comes to investment intentions.

This trend largely coincides with cryptocurrency ownership in these countries. In Spain and Germany, 38% and 32% of retail investors hold cryptocurrencies, respectively. This figure drops to 25% in the UK and 27% in the US.

North adds:

“We see a real disparity across the globe in terms of the asset classes that investors plan to prioritize in the coming months. This may be partly due to the attractiveness of savings rates in different countries. For example, in the UK and US, where savers can still secure interest rates above 5%, this asset class remains a priority. However, in Germany and the Netherlands, where savers are unlikely to get as much as 4%, cryptocurrencies and stocks are in focus.

The latest Retail Investor Beat report is based on a survey conducted among 10,000 retail investors in 12 countries and 3 continents. The following countries had 1,000 respondents: UK, USA, Germany, France, Australia, Italy and Spain. The following countries had 600 respondents: the Netherlands, Denmark, Poland, Romania and the Czech Republic.

The study was conducted between May 15 and June 5, 2024 and was conducted by the Opinium research company. Retail investors were defined as self-directed or advisory and had to own at least one investment product including shares, bonds, funds, investment ISAs or equivalents. They didn’t have to be eToro users.