Report: Retail Investors Aren't Slowing Down in 2023, Embracing Diversified Investing Strategies

Retail investors are expanding their interests, diversifying across asset classes and strategies

Investors continue diversifying across asset classes, with megatrends and cultural moments sparking the discovery of new investment strategies and opportunities. Increased adoption of fixed-income strategies in 2023 balanced out growth plays that tracked trending sectors and companies.

Key insights:

• Investors on the Public platform have increased the number of distinct asset classes (e.g. stocks, ETFs, T-bills, cryptos, and alts) owned by 25% year-over-year.
  
  
• ETF share of portfolio AUM on Public increased 4.4X year-over-year.
  
  
• AI thematic ETFs saw a 34% YoY increase in net new investors, with Nvidia (NVDA) emerging as one of the most high-interest stocks on the platform by pageviews and trading volume.
  
  
• Cultural buzz, positive and negative, translated into newly converted retail investors. The total number of Public investors in Mattel (MAT) increased 6.6X following the success of "Barbie," and the total number of investors in Bud Light's parent company AB InBev (BUD) on Public increased 1.5X despite controversy beginning in April 2023.

Retail investors are increasing their due diligence ands adopting new research methods like AI 

Retail investors are increasing their focus on due diligence and closely vetting sources for trust and credibility. Nearly one-fifth of retail investors surveyed say they are already using AI for investment research.

Key insights:

• When prioritizing sources offinancial information, 69.4% of retail investors say trust and credibility are more important in 2023 vs. 2022. A majority say that these factors are "significantly" more important.
  
  
• 19% of retail investors already use AI for investment research, with most holdouts being investors interested in learning how to leverage AI to inform their portfolio strategies.
  
  
• The growing role of AI in investment research is balancing social media as a primary channel for decision-making. 16.4% of investors say social buzz is an 'important signal' in their decision-making; however, far fewer cited it as the most important signal.

Retail investors demonstrate changing attitudes about the economy & their roles as shareholders

Retail investors are entering the remainder of 2023 with confidence but have mixed feelings about the state of the economy. They are also grappling with their roles as shareholders and are divided on the importance of ESG.

Key insights:

• Economic outlook is mixed: 59.9% of retail investors are optimistic or neutral about the economy and 40.1% are pessimistic.
  
  
• 31.1% of investors say their risk appetite increased by the end 1H 2023, compared to 16.7% who reported an increased appetite for risk at the start of the year.
  
  
• ESG remains a cultural battleground, with 55% of investors representing anti-ESG sentiment and 45% representing pro-ESG sentiment.
  
  
• 27.3% of retail investors say they participated in a proxy vote so far in 2023, with the biggest points of friction being a lack of awareness of the vote and a lack of context around what's on the ballot.

Retail investor engagement remains strong in 2023, with investors focusing more on diversifying their investment strategies and looking at fixed income. Notably, the importance of research and information-gathering persists as investors now embrace technologies like AI to inform their choices before taking action.

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Quotes

"Many investors entered the markets in 2021 around the meme stock frenzy, but we are now seeing a long diversified approach as more investors are looking at fixed income, dividend investing, and AI as new emerging trends," said Katie Perry, GM of Investor Relations at Public. "If there is one thing that is clear from our survey and the data – it is that retail investors aren't slowing down, and they still have an appetite to participate in the markets."

"As scholars who advocate that high school students should be taught basic corporate governance because it is socially unacceptable that individuals are unaware of the power that holding and voting shares carry, we welcome Public's Retail Investor Report as the wakeup call that policymakers need," said Sergio Alberto Gramitto Ricci, UMKC School of Law, and Christina Sautter, SMU Dedman School of Law, who have co-authored multiple research papers on retail investor engagement. "Most retail investors who fail to vote their shares do so because they are unaware of their right to vote and of the impact their votes can have. The influence that corporations have on our life, our society, and our planet is comparable to that of governments. Policymakers should level up investing and corporate governance education for virtually everyone as well as promote policies aimed at making information provided by issuers more digestible for the lay person." 

"Reports like these are critical for understanding the changing habits and behaviors of modern retail investors," said Alex Thaler, Co-Founder and CEO of Iconik, a shareholder engagement technology company. "Specifically, the insights strongly support the need to separate the purely financial aspects of the investing experience from the values-alignment aspects. At the deepest level, conviction to invest follows conviction about growth potential and profitability, and it's unclear to many investors whether ESG is about growth potential and profitability or values."

Contributors

This report includes commentary and inputs from:

• Nick Einhorn, VP of Research, Renaissance Capital
• Jill E. Fisch, Saul A. Fox Distinguished Professor of Business Law, co-director, Institute for Law and Economics, University of Pennsylvania
• Sergio Alberto Gramitto Ricci, University of Missouri: Kansas City School of Law
• Christina Sautter, Southern Methodist University, Dedman School of Law

Methodology

Data from the Public platform informed this report via demonstrated behaviors and activities and qualitative surveys of verified retail investors on Public.

This report offers a directional perspective on the retail investor market, drawing from Public's community of investors. Insights shared are not investment advice or an endorsement of any particular investment strategies.

Qualitative research via Public verified investor surveys fielded Jul-Aug-2023 (n=1,015), Jun-2023 (1,005), and Jan-2023 (n=1,036). All surveys reflect the responses of individuals with approved/funded accounts on the Public platform, U.S. adults 18+.

About Public

Public is an investing platform that allows everyone to invest in stocks, treasuries, ETFs, crypto, and alternative assets, like fine art and collectibles—all in one place. We help people be better investors with access to custom company metrics, live shows about the markets, and insights from a community of millions of investors, creators, and analysts. Learn more at www.public.com.

Disclosures

Disclosures: Open To The Public Investing is a member of FINRA and SIPC. This content is not investment advice. Investing involves risk of loss.

Alpha is an experiment brought to you by Public Holdings, Inc. ("Public"). Alpha is an artificial intelligence investment exploration tool powered by GPT-4, a generative large language model offered by OpenAI. Given that Alpha is experimental technology, it may sometimes give inaccurate or inappropriate information. Any output generated by Alpha is not and should not be construed as investment research, investment advice, or a recommendation to buy or sell a security, nor should any output serve as the basis for any investment decisions. Alpha output is provided "as is" and Public makes no representations or warranties with respect to the accuracy, completeness, quality, timeliness, or any other characteristic of Alpha output. We strongly recommend you independently evaluate and verify the accuracy of any Alpha output for your use case.

US Treasury investments on Public are provided by Jiko Securities, Inc, registered broker-dealer, member FINRA & SIPC. Banking services are provided by Jiko Bank, a division of Mid-Central National Bank. Not investment advice.

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