Investor confidence driving shift towards digital investments: Amundi

Retail investors, regardless of their investment approach, prioritise long-term growth, financial security and comfortable retirement, with trusted recommendations playing a key role in attracting them to digital platforms, according to Amundi’s investor survey.

Retail investment strategies have undergone significant transformations over the last decade, with a particularly rapid shift observed in the past three years. This transformation, driven by a confluence of factors including changing consumer attitudes, technological advancements and regulatory changes, is the main focus of Amundi’s report titled ‘Decoding Digital Investment.’ The 52-page report, published on Monday 22 January, explores the behaviours of over 4,100 retail investors across 11 markets in Europe (not including Luxembourg) and Asia.

Digital transformation

Amundi grouped retail investors into three classes: wholly analogue, digital-only, and hybrid investors. Surprisingly, over a third (36%) of retail investors maintain an entirely analogue approach to investing, while 25% adopt a digital-only strategy. The remaining 39% represent hybrid investors who combine online and offline approaches in their investment strategies.

These classes display variation across different markets, with investors in Italy (57%) and France (55%) more inclined to stick to wholly analogue methods, while those in the Nordics (38%) and Switzerland (33%) exhibit a greater tendency toward digital-only investing.

Demographics do play a role in determining investor personas to some extent, as Amundi finds. For instance, women investors (44%) are more likely to adopt wholly analogue strategies compared to men (29%). However, even within these groups, a substantial proportion engage with digital investments. Older investors tend to lean towards analogue methods but are not averse to digital investments, with nearly three-in-five (59%) individuals over the age of 50 investing digitally to some extent.

Wealth and investment preferences

Interestingly, as wealth increases, investors tend to adopt a more hybrid approach to investing. Among investors with €150,000 or more in assets, 20% maintain a digital-only approach, while 30% remain wholly analogue.

The choice of investment medium significantly influences the types of products held. Digital-only investors prioritise direct investments in individual stocks, fixed deposits and cryptocurrencies. Over time, these investors tend to favour direct investments, cryptocurrencies and exchange-traded funds/passively managed mutual funds. Hybrid investors, on the other hand, display greater ownership of various investment forms, indicating a diversified portfolio.

Direct digital investments

Retail investors engaging with digital channels estimate that, on average, 53% of their savings and investments are managed online without the involvement of an investment professional. Among hybrid investors, this figure stands at 47%, while digital-only investors allocate a substantial 63% of their assets to digital platforms directly, without the help of investment managers or professionals.

Market differences and expectations

Geographical variations emerge as Nordics and UK investors allocate a relatively high percentage of their assets to digital platforms, standing at 61% and 58%, respectively.

Notably, 47% of current digital investors anticipate a growing shift towards digital investment over the next five years. Switzerland (60%) and Singapore (60%) top the list for expected growth in digital investment. This shift is primarily driven by investor confidence, as those confident in their investment decisions are more likely to embrace digital solutions, stated Amundi.

Maintaining and growing assets

In terms of future investment plans, the majority of retail investors anticipate maintaining their current investment levels over the next 12 months. Wholly analogue investors are more likely to expect a decrease (27%), while hybrid and digital-only investors are more inclined to increase their investments. This difference can be attributed, in part, to life-stage and gender profile.

ESG and investor motivations

Environmental, social and governance investing is a growing trend, extending beyond environmental concerns. The top ESG themes that retail investors wish to engage with include healthcare (41%), renewables (38%), the climate transition (35%), clean water (28%) and clean transportation (23%). Notably, social equality and hydrogen and bioenergy are significant themes in Germany, while cyber-security takes precedence in Singapore.

Furthermore, age plays a role in ESG preferences, with younger investors (aged 21-30) showing more interest in social equality, gender equality, and cyber-security, while displaying less enthusiasm for renewables.

Amundi concluded its research by underscoring the diverse landscape of retail investors and their preferences, emphasising that a one-size-fits-all approach may not be effective. Demographics and wealth levels influence the adoption of digital services and the types of products held. While digital investment is on the rise, providers must adapt to cater to the evolving needs of investors. The survey also noted that recommendations from trusted sources, such as family and friends, play a crucial role in attracting investors to digital platforms, while ease of use and trust-building are essential factors in driving recommendations.