Majority of British investors predict bull market will continue throughout 2025 amidst optimism for UK stocks

• 53% of UK retail investors expect bull market to run through 2025, with 60% also backing AI stocks to keep rising
• Majority of British investors now hold domestic stocks, the highest proportion in over a year
• 3 in 4 British investors rebalancing their portfolios after the US election plan to increase their allocation to crypto 

UK retail investors are optimistic that the current bull market will continue throughout next year, 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, found that 53% expect the bull market to persist. Confidence in AI stocks also remains high, with 60% of British investors predicting they will continue to rise in 2025.

UK equities return to favour 

Although 2024’s bull market has been mainly driven by the soaring S&P 500, the survey indicates that whilst a new UK government bounce has not meaningfully materialised, UK investors remain hopeful for a home market rally. While the US was comfortably the most popular choice (41%) when retail investors were asked which market they expected to generate the strongest returns in 2025, the UK (24%) came in second place. This optimism coincides with the fact that the majority (52%) of British retail investors now hold domestic equities, the highest level in over a year, up from 45% 12 months prior.

Despite the perception of UK equities as primarily appealing to older, dividend-seeking investors, ownership is fairly evenly distributed across generations, with Millennials the least likely to hold UK stocks (48%), and Gen X the most (56%). Fixed income has also returned to favour, rising for a third consecutive quarter. UK bonds now feature in 41% of portfolios, up from 35% in Q2, as investors look to lock in higher yields ahead of anticipated rate cuts in 2025.

Analysing the data, Dan Moczulski, UK Managing Director at eToro said: “Despite the FTSE trailing other major indices, British investors continue to keep faith with discounted domestic shares. One factor may be softening domestic economic sentiment, with the proportion of UK investors citing high inflation or high interest rates as the biggest external risk to their investments at their lowest levels for over a year. Conversely, the leading concerns of global recession and international conflict may be behind a retreat into the relative stability of UK stocks and bonds.

US election sparks rebalancing and demand for cash and crypto

Donald Trump’s promise of radical reform has prompted almost half (47%) of UK retail investors to reposition their portfolios. This is most pronounced amongst younger investors, with 85% of Gen Z and 68% of Millennials rebalancing post-election, highlighting their increasingly active approach to investing.

Amongst those rebalancing, three quarters (75%) of Brits plan to upweight their exposure to cryptoassets – above the global average of 68%. 57% also plan to increase the amount of assets held in cash, above the global average of 45%, mirroring defensive moves made by Warren Buffet amidst concerns of high market concentration and unsustainable valuations.

Despite cryptoasset ownership currently skewing heavily towards young investors, those who report plans to invest in cryptoassets following the election are relatively evenly spread across age groups, with a relatively small difference between the least interested generation, Gen X (65%) and the most interested generation, Millennials (78%).

Consistently high levels of interest in crypto across generations is notable considering current levels of crypto ownership currently differ greatly between demographics. Despite featuring in the majority of Gen Z (60%) and Millennials’ (52%) portfolios, this proportion falls to 23% for Gen X, and just 5% for Baby Boomers.

Dan Moczulski added: “The sharp rise in those looking to increase their crypto allocations reflects growing confidence in the asset class, bolstered by President Trump’s pro-crypto stance. The fact that demand for crypto is balanced across older and younger investors indicates a cultural shift in how these assets are perceived, on the back of a year that saw the approval of bitcoin ETFs, positive regulatory steps, and all time highs across major cryptoassets.” 

Tech remains top target for retail investors

When asked which sector they were most likely to increase their allocation to in 2025, tech stocks were by far the most popular answer at 17%, ahead of second-placed financial services (10%).

Despite concerns over high valuations, this optimism was reflected by almost half (47%) of investors expecting the Magnificent 7 to continue outperforming the broader stock market, versus just 6% who think they will suffer a correction and underperform.

Of the seven, British investors are divided over who the main beneficiaries could be in 2025. When asked which of the Magnificent 7 they were most likely to increase their investment in, Amazon came out on top at 13%, narrowly ahead of Tesla (11%), and Apple (10%).

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 November – 28 November 2024 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.