UK retail investors are standing their ground amid global market sell offs with more than nine in 10 (95 per cent) either holding onto their investments or ‘buying the dip’, according to the latest ‘Retail Investor Beat’, a quarterly survey of 10,000 retail investors across 14 countries, from social investment network, eToro.
Of the 1,000 UK investors who were surveyed as part of the study, only one in 20 (five per cent) have sold their investments in response to recent turmoil, whilst seven in 10 (71 per cent) have held firm and one in four (24 per cent) have bought the dip. The data suggests that those who started investing during the pandemic have also held their nerve and avoided knee-jerk reactions. Among investors with up to two years’ experience, 29 per cent have bought the dip, while 64 per cent have held onto investments and just seven per cent sold when markets went south.
Ben Laidler, eToro’s global market strategist, says: “The golden rule of investing is that ‘time in the markets beats timing the markets’, so it’s encouraging to see investors, particularly those who are relatively new to investing, refraining from making any knee jerk decisions when things became choppy.
“Those who only started investing since the pandemic have been on a rollercoaster ride over the past two years. However, the message to these people is the same as it is to all investors: if you back firms you believe in and you have a long-term investment horizon, you significantly increase your chances of making a good return on your money.”
Commodities have been a particular favourite with UK investors looking to fortify their positions, with the proportion of people holding the asset class up 40 per cent since Q1, as investors battle the twin demons of rocketing inflation and rising interest rates. Investors largely turned to defensive sectors to help weather the storm, with energy (18 per cent) and utilities (16 per cent) up, but also snapped up tech stocks (16 per cent) – the new defensives in some circles – to help navigate market volatility. Healthcare and real estate (both 14 per cent up) also proved popular.
The data also highlighted that UK retail investors are feeling bullish in their approach – a third (33 per cent) plan to increase their holdings over the coming 12 months, with 47 per cent planning to invest roughly the same. Just 20 per cent plan to invest less.
However, they also recognise a number of risks to their portfolio – the biggest concern being inflation (50 per cent), followed by international conflict (43 per cent) and the state of the UK economy (40 per cent). That being said, only one in three (34 per cent) had repositioned to help protect their portfolios.
Laidler adds: “Despite a barrage of setbacks across global financial markets, our latest Retail Investor Beat shows that UK investors have found the strength to look past the short-term volatility and use these drops in prices to bolster their portfolios for the long term.
“For many, this is their first experience of a pullback in markets. Managing risk, mastering emotions and maintaining a focus on long term goals is something that even the most established investors struggle with. With bull markets ultimately built on the shoulders of bear markets and near four times the length and magnitude, staying the course should serve these investors well.”