The US is now the most popular investing destination for UK retail investors, according to Charles Schwab’s latest Investment Forces research. Almost three-quarters (72%) of the 1,000 investors surveyed in the annual poll regard the US as a good market to invest in, up 6% year-on-year.
In comparison, the UK is losing popularity amongst investors, with less than two-thirds (63%) considering it a good investment option, down 3% year-on-year. The UK now ranks 4th as the most attractive market to invest in, after Europe (69%) and Japan (68%).
Bullishness towards US driven by ability to deliver strong returns and value
Since the Investment Forces survey launched six years ago, interest in investing in the US has increased by 20%, from 52% to 72%. The latest research highlights that appetite to invest in this market is driven by investor belief that it will produce the most attractive returns (43%) and offers long-term value (40%). Almost half (45%) of investors expect the value of US equities to increase in the next six months, up 9% year-on-year, compared to 33% who think the same of UK equities, down 4% year-on-year.
Cynicism towards UK propelled by older investors & political landscape
Older generations in particular are losing their home bias and becoming more bearish about the outlook for the UK. Whilst 73% of younger investors (Gen Z and Millennials) still favour the UK as an investing destination of choice, only 55% of Boomer and Gen X investors think the same, a decline of 9% year-on-year.
Negative sentiment towards the UK amongst this older cohort is driven by apparent cynicism towards the political landscape of the UK, following the general election last year; whilst 72% of Gen Z investors say UK-based investments are now more attractive after the election, only 29% of Boomer investors say the same, marking a 43% delta between the oldest and youngest investors surveyed.
Changes in policy are also impacting investor sentiment towards the UK; six in 10 (61%) of all investors say that they are less inclined to invest in the UK market following recent changes to Capital Gains Tax.
Younger generations more open to investing in overseas markets
Appetite to invest in overseas markets is markedly higher amongst younger investors (78%) than amongst older generations (54%). Gen Z and Millennial investors are 19% more likely to invest in Europe, 18% more likely to invest in China, 12% more likely to invest in the US, 11% more likely to invest in frontier markets, 8% more likely to invest in emerging markets, and 5% more likely to invest in Japan, in comparison to their older counterparts.
Investing in China growing in popularity
Almost six in 10 (58%) investors now believe China is a good market to invest in, up 8% year-on-year. Nearly half (48%) feel Chinese equities will deliver strong returns, and four in 10 (39%) think they will deliver long-term value.
Richard Flynn, UK Managing Director at Charles Schwab, said: “Despite recent market volatility in the US, UK investors continue to look beyond their home market, with the US emerging as the preferred destination for delivering long-term returns and value. Our latest research shows a significant shift in sentiment, particularly among older investors, who are becoming more sceptical about the UK’s investment outlook. While short-term fluctuations may persist, nearly three-quarters of retail investors still view the US as a strong market to invest in, reinforcing confidence in its potential to generate attractive opportunities over the long run.”
Charles Schwab’s investment platform provides investors with access to a wide range of global investment products such as equities, bonds and options. In relation to the US market specifically, UK investors can purchase US-listed equities with $0 commission for online trades*, no service fees, and a $0 minimum to open an account.
