Global research house Investment Trends has published its latest edition of the UK Online Broking Report. During 2016 the company has conducted a large-scale survey of 12,360 UK-based investors with the study taking place before and after the Brexit vote.
According to the findings in this year’s report that is mainly focused on online shares trading, investors are taking a cautions and skeptical approach towards the UK market, while ramping up their trading. Choppy markets have been the main reason why a record number of over 80,000 active investors returned to trade the markets.
Investment Trends’ findings also suggest that levels of broker loyalty have hit an all time high, however the traders that are trading the most are quite restless. UK investors have also trimmed their expectations about growth in the stock market as they are now betting on a flat market for the next 12 months.
Retail Investors Grow 10% in 2016
The participation of retail investors in the market has spiked higher with volatile markets driving the number of active investors that return to the market to about 80,000. In the meantime at least
900,000 individuals placed at least one equities or listed fund trade in the 12 months to July 2016, which is a 10 percent increase.
Commenting on the report, the Research Director at Investment Trends, Dr Irene Guiamatsia, said: “Last year’s growth was underpinned by only a small number of investors deciding to halt their activity, when at the same time more than 80,000 awoke from dormancy and returned to investing online again”, said Guiamatsia.
According to Investment Trends, the investors that go dormant in the UK are more likely to choose a new brokerage once they decide to come back to the market. This contrasts to the company’s findings from other countries, where broker loyalty is high even for traders that decide to pull out from the market before coming back to trade.
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This year’s UK Online Broking study states that the biggest client acquisition pool for brokers are precisely those clients that have previously traded but for some reason have left the market. Investment Trends stresses the importance for companies to keep in touch with dormant clients in order to try and ‘reactivate’ them.
Frequent Traders More Likely to Switch Brokers
While broker clients in the UK are very loyal, one in ten active investors has left a broker to continue trading with another one. Things change however if we look at traders that are placing trades more frequently – they appear to be consistently on the lookout to get a better service. Investment Trends counts as frequent traders those who who place more than four trades per year and estimates them to be collectively contributing to more than half of retail trading volumes.
“It is essential for brokers to hold on to their frequent traders by delivering on the specific service areas that strengthen perception of value among this prized segment,” said Guiamatsia.
UK Market 12 Months Outlook Flat
The market outlook has suffered materially in the aftermath of the Brexit vote. Expectations were low even before the outcome of 1 percent growth, which is lower than the 4 percent in 2015 and 6 percent in 2014.
This pessimism is in line with other reports by Investment Trends, which have shown negative return expectations in six out of seven countries surveyed by the company.
“This is a significant statement, coming from a self-selective group of people that are, by virtue of them being investors, inherently optimistic about the market,” elaborated Guiamatsia.
Germany was the only market where investors were unruffled by the intensified market instability over the year. As at May 2016, German investors expected the DAX to deliver an average 6% growth in the forward looking 12 months.