Confidence in UK market hits new high

Confidence in UK market hits new high as British investors stay the course despite uncertain economic outlook

• A record third of British investors back the UK to outperform other markets over 5 years
• 56% of UK investors stay the course in times of market volatility
• Majority of UK investors believe they are on track to achieve their investing goals 
• US uncertainty driving demand for European stocks, which feature in a record 34% of UK portfolios

British investors are bullish on the outlook for the UK stock market, according to the latest quarterly Retail Investor Beat from trading and investing platform eToro.

The study, which surveyed 1,000 retail investors in the UK, revealed that a third (32%) of investors backed the UK to be the top performing stock market compared to other regions over the next 5 years, well above the previous record of 24% last quarter.

This bullishness comes as British investors report that in times of volatility, they are unlikely to change their investment approach. The majority (56%) of UK respondents typically stay the course. 16% rebalance their portfolios, 13% take the opportunity to buy more investments, while only 9% sell.

Against the backdrop of recent market turbulence, the research also found that 34% expect to increase the amount they invest over the next 3 months while just 6% expect to reduce this, indicating that over a third of investors are viewing volatility as a buying opportunity. In addition, the majority (51%) of UK investors believe they are on track to achieve their investing goals.

Lale Akoner, Global Market Strategist at eToro said: “Bullish sentiment towards the UK follows the FTSE 100’s fast start to 2025, which despite having lost some momentum, comfortably outpaced the S&P 500 in the first quarter. Investing in the US has richly rewarded investors in recent years, but a pivot from growth to value has provided a tailwind for the UK market, which is dominated by stable, income-generating stocks at discounted valuations.

“It has been a turbulent start to 2025 for markets, but during periods of uncertainty it’s crucial not to make rash decisions. Timing the market is challenging even for the world’s best investors, so the fact that UK investors are more likely to either stay the course, add to their portfolios or rebalance than they are to sell indicates an impressive degree of self-control and financial discipline, countering negative stereotypes of retail investors as ‘dumb money’.“

Tech rally expected to stabilise, but investors are diversifying across sectors and markets

Despite a slow start to the year, investors are still confident that the tech sector will continue to rally. The majority (58%) of British investors expect AI stocks to grow in 2025 versus just 8% predicting a fall, and were far more likely to expect the Magnificent Seven to continue to outperform (44%) than underperform (9%). 

Still, although few expect a correction, UK investors appear to be tempering their expectations, with just 12% predicting the Magnificent Seven to ‘significantly’ outperform, and 37% expecting returns to match the wider market.

A slowdown in the Magnificent 7 alongside macroeconomic uncertainty is prompting UK investors to rebalance away from the US. European stocks now feature in 34% of UK investors’ portfolios, up from 29% last quarter. Alongside 32% who predict the UK will outperform other markets over 5 years, 15% opted for Europe – well above the previous high of 10%. By contrast, those backing the US have dropped to 36%, down from its peak of 41% in Q4.

On a portfolio level, sectors that are well-represented in UK and European indices also saw notable quarter-on-quarter increases in holders, including industrials (25% to 29%), utilities (29% to 33%) and mining (20% to 25%).

Lale Akoner added: “With economic policy uncertainty in the US and concentration risk in broader indices, more investors are turning to Europe and the UK to diversify and protect their capital. Unlike the US, where monetary policy remains uncertain, European and UK markets benefit from falling inflation and easing fiscal constraints, providing a clearer outlook for investors. Moreover, attractive valuations, stable dividends, and a greater focus from policymakers on supporting domestic industries is driving renewed interest in the region.”

About this report

The latest Retail Investor Beat was based on a survey of 10,000 retail investors across 12 countries and 3 continents. The following countries had 1,000 respondents: UK, US, Germany, France, Australia, Italy and Spain. The following countries had 600 respondents: Netherlands, Denmark, Poland, Romania, and the Czech Republic.

The survey was conducted from 18 February – 4 March 2025 and carried out by research company Opinium. Retail investors were defined as self-directed or advised and had to hold at least one investment product including shares, bonds, funds, investment ISAs or equivalent. They did not need to be eToro users.