- 20 per cent of Aussie retail investors to increase future investments in seven big tech stocks
- Almost half (48 per cent) don’t plan to rebalance portfolios this year despite expected rate cuts
- For Aussie investors planning to rebalance, the most common asset changes will be to increase allocation to equities and cut down on cash
- Young investors most likely to adapt their strategies – 43 per cent will rebalance their portfolio vs 17 per cent of over-55s
Tuesday, 2nd April, 2024 – One in five retail investors (20 per cent) plan to increase their investments in the so-called ‘Magnificent 7‘ big tech stocks in 2024, according to data from the latest Retail Investor Beat (RIB) from trading and investment platform eToro.
In the study of 1,000 Australian retail investors, 7 per cent said that they plan to sell some of their holdings in the Magnificent 7 this year (which includes Amazon, Apple, Microsoft, Meta, Tesla, Nvidia and Alphabet), locking in profits and reducing their allocation to these market-dominating stocks. A further 10 per cent said they would reduce the amount of new capital they invest in these companies in the months ahead, while the majority of Aussie retail investors (42 per cent) won’t make any changes to their allocation.
The RIB findings follow a blockbuster 14 months for these seven companies, with their collective share price up 90 per cent since January 2023. The findings also come ahead of several anticipated rate cuts in 2024, which are expected to support a resurgence in other more cyclical sectors in the equity market.
Commenting on the data, eToro Market Analyst Josh Gilbert, says: “ The magnificent seven continue to lead earnings growth, and therefore it’s no surprise to see investors wanting to increase their allocations to these tech juggernauts. Nvidia and Microsoft are just two examples of companies making serious profits from the AI revolution, and investors see this as the tip of the iceberg for Artificial intelligence, clearly expecting these businesses to keep reaping the rewards. ”
According to the RIB data, the majority of Aussie retail investors will not adapt their strategy in light of the shifting economic backdrop, with 48 per cent not planning to rebalance their portfolios ahead of predicted rate cuts and a potential market rotation. Whereas globally, over half of retail investors (53 per cent) are planning to adapt their strategy.
However, among the 40 per cent of Aussies that have – or are planning- to adapt their strategy, young investors are taking charge, with 43 per cent of 18 to 34-year-olds rebalancing their portfolio, versus only 17 per cent of over 55s.
For Aussie retail investors planning to rebalance their portfolios, the most common change to asset allocation will be an increase in equity investments (50 per cent), followed by holding less money in cash (40 per cent).
Gilbert adds: “While nearly half of investors are holding steady without plans for portfolio adjustments, younger investors are showing an increased level of sophistication in their investing skill set by identifying moments of opportunity and taking action early on, whilst not being afraid to rebalance their portfolio.
The much hoped-for cuts in global interest rates are set to move from hope to reality in the middle to back end of the year, with the RBA and Fed all set to take action. This will help to support economies, earnings growth, and stock market valuations, while driving a major rotation towards more economically sensitive and cheaper areas, like real estate, small caps, and emerging markets.
We continue to view rate cuts as a positive for global markets, and therefore investors’ decisions to increase equity investments may prove to be a prudent one. ”
When asked what sector they will prioritise in 2024, Aussie retail investors were most likely to say tech (15 per cent), followed by financial services (12 per cent). The number of investors holding AI-related stocks remains steady, shifting slightly from 20 per cent to 19 per cent in the first quarter of 2024, showing that the Magnificent 7 continue to be reliable, worthwhile investments for Aussie retail investors.
Notes to editors
About this report
The latest Retail Investor Beat was based on a survey of 10,000 retail investors across 13 countries and 3 continents. The following countries had 1,000 respondents: UK, US, Germany, France, Australia, Italy and Spain. The following countries had 500 respondents: Netherlands, Denmark, Norway, Poland, Romania, and the Czech Republic.
The survey was conducted from 15 February – 5 March 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.
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