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.