As the U.S. presidential election approaches, American retail investors are making strategic adjustments to their portfolios, according to a recent study. eToro’s survey indicates that 49% of investors are either changing their holdings or planning to do so in anticipation of the election’s impact.
Proactive Portfolio Adjustments
The survey, which gathered insights from 1,000 U.S. retail investors, reveals diverse approaches. About 42% of respondents are increasing their cash reserves, opting for liquidity amid potential market volatility. Meanwhile, 35% are expanding their investments in equities, and 20% are looking into cryptocurrency assets.
Generational differences are also evident in how investors are reacting. Younger generations, particularly Gen Z (69%) and Millennials (68%), show a higher tendency to adjust their portfolios, aiming to capitalize on market fluctuations. In contrast, older generations like Boomers and Gen X are more conservative, with over half indicating they plan to stick to their current strategies.
Bret Kenwell, an analyst at eToro, noted: “Adjusting one’s portfolio before a major event like an election is not unusual. Younger investors are more dynamic in their approach, while older investors prefer a steadier, long-term strategy.”
Sector Preferences Amid Election Concerns
Despite election-related uncertainty, certain sectors continue to attract retail investor interest. Financial services remain the leading sector, with 58% of respondents either maintaining or increasing their positions. Technology and energy sectors are also popular, especially among Gen Z and the Silent Generation, who are increasingly investing in tech despite recent market fluctuations.
Among top technology stocks, Amazon is the most sought-after, with 26% planning to boost their holdings. On the other hand, Tesla, Alphabet, and Nvidia are less favored, with around one-third of respondents indicating no plans to invest in these companies.
The study highlights that while some investors are taking a cautious stance by increasing cash reserves, many others, especially younger investors, are seeking opportunities to profit from anticipated market changes leading up to the elections.
