65% of ETF investors around the world say that they are comfortable with the highs and lows of the financial markets, versus investors without ETFs (41%).
Collectively, about half of investors are comfortable with the highs and lows of the financial markets. But more investors in EMEA and APAC are comfortable with the current market volatility than those in the US.
We also found that, across the globe, younger generations were more comfortable with the highs and lows of the financial markets than those in or nearing retirement age.
Just under half of investors say that they have left their money as is and stuck to their long-term plan despite financial market volatility. A quarter say that they have moved money to different investments to reduce loss.
In a study we conducted in 2019,1 83% of US investors said that they would leave their money as is, even during volatile markets, to stick with their long-term strategy — and potentially invest even more.
But faced with the volatility of the current environment, less US investors stuck to what they said they would do in 2019. Instead, they moved their money to other investments to curb losses.
And when comparing against US trends, even more investors in EMEA and APAC moved money to different investments to reduce loss.
Figure 5: Investors’ Short-Term Volatility Behavior
A US Trend and Global Comparison
Looking at the data through a different lens, older generations had a tendency to leave their money as is and stick to their long-term strategies. Millennials were most likely to either invest more or move money to other investments in an attempt to reduce loss.
More than two-thirds of investors globally say that the stock market’s volatility is going to continue for the next 12 months — or longer. The same proportion, however, also believes that volatility in the market is not always a bad thing, as it can provide opportunities to buy at lower share prices.
Figure 7: Ranking Investors’ Attitudes Toward Market Volatility
Determined by the Percentage of Investors Who Agreed
agree that when there is market volatility, it is important to have more liquid investments.
prefer to own an entire index of stocks rather than pick their own stocks — and they’re more likely to consider low-cost ETFs or index funds given the current market conditions.
Source: State Street Global Advisors, as of December 12, 2022.
Investors in EMEA and APAC had a more positive response to statements like the following:
Figure 8: Ranking Investors’ Attitudes Toward Market Volatility
Determined by the Percentage of Investors in Each Region Who Agreed
Figure 9: Ranking Investors’ Attitudes Toward Market Volatility
Determined by the Percentage of Investors in Each Generation Who Agreed
Around the world, rising inflation is the greatest concern among investors, followed by their respective country’s economic outlook and rising taxes.
Fewer investors are concerned about the structure of their investment portfolio given the volatility in the stock market.
Figure 10: Investors’ Top Financial Concerns
Determined by the Percentage of Investors Who Agreed
When looking at the data by region, investors in EMEA, APAC, and the US are all concerned about external factors, like rising inflation and each country’s economic outlook. More investors in EMEA and APAC are concerned about personal circumstances, particularly maintaining their current standard of living.
Figure 11: Investors’ Top Financial Concerns
Determined by the Percentage of Investors in Each Region Who Agreed
Financial advisors (FAs) play an important role for investors — especially in volatile markets. In our study, we found that the majority of investors who have FAs:
Even so, fewer investors in EMEA and APAC than the US indicate that their FA informed them about how market volatility could affect their long-term financial goals.
Of the three generations surveyed, Millennials noted that they were the least likely to be informed by an FA about how volatility could impact their short-term investments and long-term goals.
Interestingly, and likely related, fewer Millennials value their FA’s knowledge and guidance. To add value during stressed markets, advisors can inform these investors of the volatility ahead, help reorient them to the long-term outcomes they sought to achieve in the first place, and review how well-positioned they are to reach those goals.
Perhaps FA involvement could have a positive impact on overall investor sentiment during market stress. Another key factor: the construction of investors’ portfolios.
Are there specific investment vehicles that are popular among today’s individual investors?
State Street Global Advisors, in partnership with Prodege and A2B, conducted a study surveying more than 1,000 individual investors. Read more about the details.