Global research firm Investment Trends last week launched its 2021 UK Online Investing Report, the largest, most comprehensive study of the views and preferences of online investors in the UK.
The twelfth annual edition of the report reveals that the UK active listed equities population surged to record levels. 1.1 million UK investors placed at least one online listed deal in the 12 months to May 2021, up 8% from 960,000 in 2020.
In the last 12 months alone, 157,000 Britons began dealing listed equities for the first time amidst the pandemic-induced lockdown and wild swings in US stocks led by retail investors.
“As their return expectations recover, the number of active listed equities investors grew for the second consecutive year on the back of continued strong inflows of first-time investors and low dormancy,” said Lorenzo Vignati, Senior Analyst at Investment Trends. “Despite first-time driving growth in the market, our modelling suggests that last year’s cohort of first-time investors has experienced high dormancy – much higher than experienced investors (41% vs 4%). As such, it is important to focus on keeping new clients engaged.”
First time investors are trading more actively
This year’s class of first-time investors trade more actively, most often prompted to invest by the ability to start with a small sum of capital (47%) and the desire to learn a new skill (45%). Reactivated investors were more likely to be prompted by their quest to grow their retirement pot (41%) or their increasingly optimistic market outlook (29%).
Freetrade, Trading 212, eToro and Vanguard are making significant inroads, especially among the new-to-market segment.
“Among providers that stand out among first-time investors, three out of four stand out for their mobile app, access to international markets and easy onboarding,” said Vignati.
Investing platforms challenged by need to provide education
Investing platforms now face a significant challenge of providing education at scale – in a way that resonates with all investor segments. Whilst they applaud the relatively frictionless account opening process of their current platform, new investors do not feel as well supported when making their first investment.
“Demand for education persists across all investor segments, which presents an opportunity for brokers to stand out – by tailoring their content more effectively to serve each segment. For instance, easy to access content and multi-task friendly channels such as YouTube are gaining traction among younger investors,” added Vignati.
The Investment Trends 2021 UK Online Investing Report provides a detailed analysis of the UK online investing market, examining the attitudes, needs and product usage of active online investors.
Based on a survey of 13,626 investors and traders conducted in May 2021, the report is the largest and most comprehensive independent study of the retail online investing market in the UK.