Financial stocks more popular than tech

Retail investors are often expected to focus on tech stocks. However, stocks in financial services are more commonly owned by retail investors, by 61 percent. Technology is the second most owned sector, at 40 percent. Energy was third, at 35 percent.

These data come from the latest Retail Investor Beat, a study conducted by Opinium, commissioned by trading platform eToro. As many as 10,000 investors were surveyed in May and June in 12 countries, including Germany, the UK, the US, France, Australia, Italy, Spain, the Netherlands, Denmark, Poland, Romania and the Czech Republic.

69% investors hold cash assets

The fact that many investors have stocks in these sectors, can be explained by the fact that these industries have been in focus in the last 18 months. Financial services stocks are expected to build momentum as the sector benefits from lower interest rates and strong loan growth.

‘At least 49% of retail investors hold locally listed stocks’

The research also shows that retail investors often own cash assets, like savings accounts (69 percent). Locally listed stocks are also popular, with 49 percent of investors holding those in their portfolios. That asset is followed by domestic bonds (34 percent). Cash assets have been increasing in popularity, as 5 percent risk-free savings rates are widely available.

Crypto seen as biggest opportunity

When looking at the future, 18 percent of respondents said that they would invest in tech. Another 12 percent said they would invest in financial services. Other would diversify their portfolio with a mix of real estate (9 percent), healthcare (8 percent) and energy (8 percent).

‘15% of all investors say that they will prioritize crypto over other asset classes’

And when looking at asset classes, crypto was seen as the biggest opportunity. At least 15 percent of investors stated that they would prioritize this asset class over others. Cash came second (14 percent), followed by locally-listed stock (13 percent), internationally-listed stocks (9 percent), commodities (8 percent), domestic bonds (7 percent), foreign exchange market (5 percent), alternative investments (4 percent) and foreign bonds (4 percent).

Differences per country

However, there are differences when looking at preferences from investors in each country. In the UK, at least 25 percent of investors plan to prioritize cash over other assets. This means that this asset class will be prioritized more often than crypto (11 percent), local stocks (8 percent), and international stocks (10 percent).

The same trend is visible in the US and France. On the other hand, the reverse is seen in Germany and Spain, where crypto ranks first and cash third. It seems that this difference can be explained by how often crypto is owned. In Spain, 38 percent of investors hold this asset. In Germany that share comes to 32 percent. There is a drop when compared to the UK (25 percent) and the US (27 percent).

‘Cash will remain dominant asset’

“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 favor of equities and other asset classes like real estate”, said eToro Analyst Sam North.

“The average global retail investor is also well-positioned for what is 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 globalization of financial markets in recent years, there remains a major home bias towards locally-listed stocks.”