UK retail investors love affair with cash

UK’s love affair with cash: British retail investors less likely than global peers to invest in homegrown firms but far more likely to hold cash

• Four in five (82%) UK retail investors hold cash assets versus global average of 67%
• 47% of Brits invest in homegrown stocks, 13% below the global average
• Gen Z Brits are breaking the mould by investing in crypto rather than cash

British retail investors are far more likely to keep money in cash than their global peers and less likely to invest in homegrown companies, according to data from the latest Retail Investor Beat (RIB) from trading and investing platform eToro.

With just a month until the new Government’s first Budget, the research illustrates why many are hoping to see policies which boost the attractiveness of the UK’s capital markets. Four in five (82%) of the 1,000 UK retail investors in the study say they currently hold cash assets, far above the global average of 67% (data from 11 other countries). UK retail investors are also less likely to hold homegrown stocks (47%) versus international peers (54%), with this gap widening in the last three months despite the relatively strong performance of the FTSE100 this year.

Other than cash, the only other asset class that UK investors are more likely to own than their global peers is domestic bonds, which feature in 38% of British portfolios versus 36% globally. One asset class which has grown significantly in popularity amongst both UK and global investors is commodities. In the last year, the proportion of Brits invested in commodities has jumped from 22% to 27%, with record-breaking gold prices and its ‘safe haven’ status drawing in new investors.

Table shows the six most popular asset classes amongst UK retail investors and the proportion of UK and global retail investors that hold them

Prospect of rate cuts fails to dampen appetite for cash, except for Gen Z

Rate cuts may be coming thick and fast globally, but for UK-based investors, cash is still the priority. When asked which asset class they are most likely to invest in over the next quarter, cash came first (selected by 24%).

However, Gen Z investors are breaking the mould, being twice as likely to prioritise cryptoassets over cash (28% vs 14%). Amongst this cohort, international stocks were also four times more favoured than local stocks (12% vs 3%), emphasising the challenge that UK firms face in attracting the new wave of retail investors.

Commenting on the data, Dan Moczulski, UK Managing Director at eToro says: “Younger investors such as Gen Zs and Millennials are moving beyond cash, but most UK investors still need a push to explore other asset classes. Stocks have comfortably outperformed cash savings historically, and with rates coming down, a new government and more stability, it is potentially a good time to be in the UK’s capital markets. 

“The government can play a key role in getting Brits more engaged with markets and building more diversified portfolios. The Autumn budget will set the tone for their wealth creation plan, and we hope to see measures to incentivise retail investment high on the agenda. Making our home market more attractive and exciting for investors would go a long way towards achieving this.”

Millennials are the biggest tech bulls, while Gen Z backs financials and real estate

The research also asked which sectors UK investors were most likely back over the next quarter. Perhaps surprisingly, Gen Z were the only age group not to back technology over other sectors. As the generation least likely to have a foot on the property ladder, they are instead increasing their weighting to real estate (14%) and financial services (14%), as they look for alternative ways to add exposure to property.

Conversely, the first generation of digital natives are still not giving up on tech, with almost one in four (24%) Millennials continuing to prioritise the sector.

Table shows which sector UK investors are most likely to increase their investments in over next three months

About this report

The latest Retail Investor Beat was based on a survey of 10,000 retail investors across 12 countries and 3 continents. The following countries had 1,000 respondents: UK, US, Germany, France, Australia, Italy and Spain. The following countries had 600 respondents: Netherlands, Denmark, Poland, Romania, and the Czech Republic.

The survey was conducted from 16 August – 2 September 2024 and carried out by research company Opinium. Retail investors were defined as self-directed or advised and had to hold at least one investment product including shares, bonds, funds, investment ISAs or equivalent. They did not need to be eToro users.