Turbulent Markets Aren’t Spooking American Retail Investors

70% of U.S. retail investors remain confident regarding investments, despite ongoing market volatility

  • 88% of investors have invested the same amount or more over the past three months
  • Retail investor confidence has rebounded to highest level since Q4 2021
  • 37% of retail investors believe that crypto is a transformative asset class
  • 21% of investors cited potential U.S. recession as the biggest external risk to their portfolios in the next 12 months

Wednesday March 29, 2023 Retail investor confidence has rebounded to the highest level since Q4 2021, with 70% of US investors feeling confident in their investments. This is up from 66% a year ago, according to the latest Retail Investor Beat from social trading and investing network eToro. 

The findings – taken from the quarterly survey of 10,000 retail investors across 13 countries, including the United States – indicate that after more than a year of highly turbulent markets, retail investors have better diversified their investments. Investors are largely holding steady in their investment plans, remaining open to new technology and taking a more global approach, looking for opportunities in different markets and asset classes.

The vast majority of U.S. retail investors (88%) have invested the same amount or more over the past three months, with 89% planning to invest the same or more in the next three months. This indicates many investors are thinking long-term and not letting recent market movements shakeup their overall investment strategy. Furthermore, almost half (45%) of U.S. retail investors say they do nothing when markets rally. While many are staying the course, it’s hard for investors to not feel the impact of inflation and a looming potential recession. 21% of investors cited potential U.S. recession as the biggest external risk to their portfolios in the coming year.

Commenting on the latest report, Callie Cox, U.S. Investment Analyst at eToro, said:”Retail investors still feel confident in their portfolios, which shows just how resilient consumers have been in the face of persistent inflation and negative headlines. Individual investors are sophisticated, focused, and more educated than ever.”

As investors look for more opportunities, they’re also looking outside of the U.S. The amount of U.S. retail investors holding domestic equities has fallen from 60% in Q1 2022 to 42% in Q1 2023, a 30%, or 18 percentage point, drop. Currently, 77% of respondents have exposure to the U.S. in their portfolio, but only 52% of them think the U.S. market presents the best investment opportunity over the next 12 months, showing many see U.S. markets as a long-term strategy. 

Cash and stocks top the charts as the most-held assets for U.S. investors, at 51% and 42%, respectively. More than half (57%) of aging millennials (those between the ages of 35-44) are invested in cash, primarily to have funds on hand for when market conditions look better. Despite recent headlines around cryptoassets, it appears attitudes towards crypto have been largely unchanged. More than one in three (37%) of respondents believe that crypto is a transformative asset class. However, there is still a gap when it comes to men investing in crypto vs. women investing in crypto. Almost half (42%) of women say they don’t invest in it because they don’t know enough about it.

Investors are clearly still nervous about US markets, so they’re looking elsewhere for opportunity. However, this could be more of a strategic shift than an ominous sign of what’s to come. Inflation adds pressure to make your money work for you, and investors realize that”, adds Cox.