Retail investors are bullish on market prospects after elections

• UK retail investors are increasingly bullish about the prospects of UK and US markets once the upcoming elections have been decided
• Investors are most bullish about the expected performance of the FTSE 100 this year, closely followed by the Dow Jones Industrial Average
• Investors are more optimistic than in previous years as portfolio returns have improved in recent months

UK retail investors are increasingly bullish about the prospects for UK and US markets after the elections in both countries are settled, according to new Investment Forces research from Charles Schwab UK.

Two-thirds of investors (66%) expect UK markets will become more attractive after the next election. For the US market, more than six in 10 (62%) UK retail investors expect US-based investments will be even more attractive after the US elections in November 2024. Of the investors surveyed, 45% expect the Republicans will be the overall winners, compared to 40% who expect the Democrats to win. However, those expecting the Democrats to win the election are slightly more bullish about the market outlook afterwards: 65% of this group expect US assets to increase in value, in comparison to 62% of UK investors who expect a Republican win will spur market growth.

More than four in 10 UK retail investors (44%) are bullish about the overall outlook for global markets in the next 12 months. This is an improvement from 35% last year. Nearly nine in ten (88%) expect the value of UK equities to either increase or stay the same in the next six months and 87% expect the value of US equities to either increase or stay the same.  Two in three (66%) investors consider the UK and US as good areas for investment this year.

However, the reasons for investor optimism varied for each market. The most common reasons investors favoured UK assets are that they always invest in this market (32%) and they consider it a safe, less volatile opportunity (30%). The main reasons investors consider the US as an attractive place to invest are that they believe it will offer the most attractive returns (48%) and they feel there is long-term value in this market (46%).

In terms of market indices, investors are most bullish about the FTSE 100 as 42% of investors expect its value to increase in the next year compared to only 16% who expect it to fall. The FTSE is closely followed by the Dow Jones Industrial Average, with 38% of investors expecting it to increase in the next 12 months, and only 13% expecting it to decline.

Charles Schwab UK: % expectation of market value in the next 12 months

The increased optimism follows improved investment performance in the past year. More than half (52%) of investors said their portfolios have increased in value in the past three months. This compares to 45% of investors who said the portfolios had improved over the same three-month period in last year’s Investment Forces research.

Richard Flynn, UK Managing Director at Charles Schwab, said: “Our research shows a growing sense of optimism among UK retail investors. The findings reflect the belief amongst investors that market values will improve once the uncertainty around the upcoming elections has been resolved. Most investors believe both the UK and US markets will provide attractive opportunities this year. However, there are different reasons that investors are bullish about each market. The UK is seen as a less volatile market than other countries while the US is perceived to have more long-term value.”

Charles Schwab’s investment platform provides investors with access to a wide range of global investment products such as equities, exchange-traded funds (ETFs), bonds and options.  In relation to the US market specifically, UK investors can purchase US-listed equities with $0 commission for online trades, no service fees, and a $0 minimum to open an account.

About the Survey  

Charles Schwab conducted an online survey to understand the attitudes and behaviours of UK investors in the context of current conditions affecting financial markets. Respondents were aged 18 or over and held at least one type of investment (based on a list of different asset classes, vehicles and other investment instruments). 

Survey responses were collected and analysed from 1,000 UK respondents. The survey captured a natural spread of demographics across age, region, gender, working status, income and total value of savings and investments.  Research completed in February 2024.