Investors shun short-term gains amid market volatility
UK retail investors are turning away from short term trading in favour of increased portfolio diversification, in a bid to weather ongoing market volatility.
Over the past two years investors have become significantly diversified, increasing allocations across all major asset classes, according to the latest retail investor survey from Etoro.
In particular, overseas-listed equities saw a 21 per cent increase in investor holdings, while foreign bonds reported a 14 per cent increase.
Investors also turned to previously ignored assets, including crypto and commodities, reflecting investor’s heightened need to spread their investment in order to swerve volatility.
Lale Akoner, global market strategist at Etoro, said: “Retail investors are now noticeably different from the opportunistic stereotype that dominated headlines in 2021…a clear shift towards more resilient portfolio construction instead of trying to time the markets or chase short term gains.
“Many investors entered the markets during a period of structural change with heightened volatility and macro uncertainty, which has shaped how they approach investing today.”
Akoner added that “improved access to market data, global macro insights and risk management tools” have made investors more aware of the “broader forces influencing returns”.
Gold continues to shine
Despite the recent swing in prices, gold has continued to be a prominent fixture in retail portfolios, held by over 45 per cent of UK investors.
The asset’s appeal is also continuing to balloon, with a further 27 per cent of investors considering getting their hands on the previous metal, with two in ten anticipating doing so within the next two years.
More than half of UK investors expect the price of gold to rise over the next six to twelve months, maintaining its record breaking rally, and offsetting fears that the asset’s value may be at risk off the back of the nomination of Kevin Warsh as chair of the US Federal Reserve.
Trump’s nomination of the ‘hawkish’ Warsh caused the gold price to plummet amid expectations the incoming chair would resist president Trump’s demand for rapid interest rate cuts. But the yellow metal has since recovered, hovering above the $5,000 mark.
High engagement
UK investors are also becoming increasingly engaged with their portfolio management, with 76 per cent reviewing investments monthly.
Over 80 per cent also reported investing regularly each month, with younger generations showing the highest rates of engagement.
However, while large numbers of Gen Z and Millennials consistently monitored investments, older generations are not far behind, with 82 per cent of Gen X and 73 per cent of boomers checking regularly.
Moreover, investors are leaving cash behind, with the asset seeing just a one per cent increase in investor holdings, reflecting the growing movement away from the safety of bank savings amid dwindling interest rate levels.