Retail Investors' #1 Concern: Politics

Retail investors are optimistic about the future, but when it comes to what strikes fear in them, nothing is more glaring than the political landscape.

Over two-thirds of retail investors are bullish on the markets over the next six months, according to the latest results from the ETF Report: Global Investor Survey. Another 16% of investors are neutral, while a similar percentage are bearish.

But despite their optimism, if pressed to point to their biggest worries, half of investors said that politics as their number one concern.

The new year will usher in a new president and it remains to be seen how the new administration’s economic policies will be different than the previous one. 

The Political Landscape Stokes Fear in Retail Investors

In addition to politics, retail investors said that recession worries were top of mind as well, as nearly 30% of respondents said that a recession was their biggest concern over the next six months.

Another 12% said that inflation was their top worry, while 7% said that monetary policy and high interest rates were their number one concern. 

In response to surging inflation, the Federal Reserve raised interest rates as high as 5.5% at the end of 2023 and left them there for over a year.

Earlier this year, the U.S. central bank began lowering rates as inflation decelerated and economic growth cooled. 

For their part, despite being well aware of the potential risks that lurk, retail investors have no intention of pulling back on their investments.

Over half—55% of respondents—say that they will be investing in more exchange-traded funds over the next six months, while another 39% intend to hold their ETF positions steady. 

Retail investors noted that they are particularly keen on adding money to core equity ETFs, dividend/income ETFs, and technology ETFs.

Those fund segments have taken in billions of dollars of inflows over the course of the year.

For further insights and to read the Global Investor Survey, click here.