42% of UK retail investors rely on their own research or ‘star’ investors for inspiration

National survey finds 42% of UK retail investors rely on their own research — not IFA’s or ‘star’ investors—for inspiration

 
Traders shun meme stocks in favour of growth and tech stocks; investors eye financial, technology, and energy sectors for market opportunities

British traders and investors are choosing to do their own research rather than take direction from independent financial advisors (IFAs) or influencers, according to a new national survey commissioned by high-growth trading platform, Capital.com.

The findings are based on a nationally representative survey of 19,451 UK adults, of which 2,036 are traders or investors. In this survey, investors and traders are defined as adults who had invested or traded in mutual funds, bonds, forex, commodities, options, CFDs or spread bets in the past 12 months. The survey, commissioned by Capital.com and polled by Find Out Now, was carried out between 21 Nov to 4 Dec 2023.

Four in 10 (42%) traders and investors in the UK make investment decisions based on their own research and analysis, according to the survey. This is compared to just 10% of traders and investors who say they rely on financial advisors for investment direction. A further 11%  turn to social media platforms, influencers, or ‘star’ investors such as Warren Buffett for inspiration and tips.

Asked which resources they most frequently use to inform their trading and investment research, 21% of respondents say they read news articles (21%), while 28% use investing websites and trading platforms (28%) to help them come up with trading ideas.

These findings highlight how UK retail investors are prioritising independent research in their overall trading and investment strategies.

 
Kyle Rodda, Senior Market Analyst at Capital.com, said:

“One of the most important things to remember when trading is allowing enough time for research. When traders hear about a popular trade or a trading tip online the urge to jump straight in is strong. But if they spend enough time researching and learning about the market they plan to trade, they are more likely to make better informed trading and investing choices. Our survey highlights that UK traders and investors are clearly doing this.”

The survey also reveals a strong interest for growth and tech stocks in the year ahead. Despite high interest rates and lacklustre economic conditions, 28% of respondents say they will trade or invest in growth stocks this year, followed by tech (25%) and value stocks (22%).

Explaining why traders might be interested in growth and tech stocks in the current market, Rodda said:

“Growth and tech have become synonymous in the last year. The artificial intelligence (AI) boom has driven much of the equity market boom in the past year and spurred bullish sentiment and risk-taking among investors. Interest in growth, and by extension tech stocks, is inherently driven by a mix of  fundamentals and hype. In addition to the hype surrounding AI mania across the tech sector, investor interest in growth stocks was, for a while, also driven by rate cut expectations. However, that has diminished as a factor recently with those cuts being priced out of the market.”

Interestingly, UK traders and investors are falling out of love with meme stocks, with just 4% or respondents saying they are likely to trade meme stocks this year.

“Meme-stock mania was mostly an aberration. It emerged out of a bizarre period of very lax financial conditions, huge amounts of excess savings, and lockdowns that limited what people could do and spend money on. Higher interest rates and deflated asset values killed the vibe for a little while,” added Rodda.

Sectors UK traders and investors are following closely for potential investment or trading opportunities in 2024 include technology (32%), energy ( 30%), financials (26%), metals and mining (15%), retail (11%) and automotive (8%).

“Energy and miners remain in focus amid heightened geopolitical risks. Rising tensions in the Middle East and the ongoing Ukraine-Russia war has led traders to seek out opportunities in oil and natural gas, which have been volatile againsts the risk of supply disruptions. Investors and traders have also tapped into gold as a hedge against the escalating geopolitical tensions,” said Rodda.