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Key Takeaways
- The Retail Investor Beat report from trading platform eToro highlighted the most popular investments for retail money in 2024, with finance stocks and cash favored most.
- Technology stocks are close behind, followed by energy and communications shares.
- Younger retail investors say they are likely to prioritize cryptocurrency.
Financial services stocks and cash are currently popular with US retail investors, according to a new report from trading and investing platform eToro.
In the company’s latest Retail Investor Beat (RIB) report, released Wednesday, 54% of investors said they were holding financial services stocks, with technology close behind at 49%. Energy stocks (39%) and communications (36%) followed.
Last year’s regional banking contagion, driven by the collapse of Silicon Valley Bank, has left financial-sector stocks such as Charles Schwab (SCHW), U.S. Bancorp (USB), and PNC Financial Services (PNC) trading below their pre-crisis levels, enticing value investors.
Tech Sector Favored for More Buying
Technology stocks are an obvious target after the surge in generative artificial intelligence (AI) stocks, led by chipmaker Nvidia (NVDA). However, eToro’s report indicates that some investors may fear that they have missed the boat, with 76% of U.S. investors reporting holding cash but 22% saying that they would up their bets in technology.
Crypto assets are popular among investors aged 18-34, with 26% saying they will increase their digital investment portfolio over other assets. Some of those younger investors are also getting their first tastes of negative market swings, with 63% saying they are more cautious after losses, compared with 22% of the 55-plus age range saying the same.
Inflation Seen as Biggest Portfolio Threat
But the younger investors said they were more likely to buy on dips, at 43% compared with 16% of older investors. Despite a recent easing in U.S. inflation, 30% of investors said inflation was the biggest threat to their portfolio, followed by the economy (21%) and high interest rates (11%).
“With interest rates still elevated in the US, it’s no surprise that investors are leaning into cash assets for a solid risk-free return,” eToro’s U.S. investment analyst Bret Kenwell said. “Investors’ cash holdings puts them in a good place to take advantage of market opportunities when they arise,” he added.