Retail investors are restoring their confidence in the US market following two consecutive quarters of decline, as indicated by a recent survey conducted across 12 countries that involved a sample of 10,000 retail investors. The findings reveal that 38% of participants believe the US presents the greatest potential for long-term returns; this marks a significant 12% increase since the previous quarter, reversing declines recorded in earlier periods.
The survey also highlights shifts in portfolio allocations, with 43% of investors now having exposure to the US market. This figure represents an 8% rise from the previous quarter, reaching its highest point since the beginning of 2023. Analysts note that this change reflects a renewed confidence in the US economy’s ability to endure challenges, reinforcing the view that American markets remain essential for global investors despite the allure of international diversification.
Conversely, retail investors exhibit a more cautious attitude towards a group of major technology stocks often referred to as the “Magnificent 7,” which includes household names like Amazon, Apple, and Microsoft. Only 13% of investors expect these stocks to significantly outperform the broader market by 2025, while a larger 33% anticipate they will achieve slight outperformance. The proportion of investors planning to scale back their investments in these companies has increased modestly compared to last year, with Tesla experiencing the most noticeable shift; a 6% increase has been observed in investors either not currently invested in or planning to reduce their holdings in the company.
Attention has also centered on the outlook for the US dollar, with many retail investors expressing readiness to modify their portfolios in anticipation of potential long-term weaknesses in the currency. Nonetheless, a robust 83% believe the dollar will retain its status as the primary global reserve currency over the next decade, with merely 7% predicting it may lose this title. Other mentioned alternatives include the euro, the Chinese yuan, gold, and various forms of central bank digital currencies.
The survey suggests that retail investors are striking a balance between seeking diversification and recognizing that long-term growth prospects in investing continue to be anchored in the US. Easing concerns over a worldwide recession are evident in the results, as only 23% of participants listed the global economy as the principal risk to their portfolios, down from 26% in the prior quarter. Inflation remains a top concern for 19% of investors, while anxiety regarding one’s domestic economy has risen to 14%, increasing from 11%. Notably, US investors express the highest level of worry, with 28% citing domestic economic conditions as their primary concern.
Overall, the findings indicate a cautious but optimistic shift in the sentiment of retail investors in regard to the US market following previous downturns, demonstrating an inclination to navigate both global and local economic landscapes strategically.