At DriveWealth, we’ve seen the same retail investing surge that other brokers are seeing. Q2 retail activity surprised on the upside, hitting new records after a record Q11 despite a 39% rebound off the market low in March and continued global economic uncertainty driven by the Covid-19 pandemic.
News articles have attributed this boom in retail investing to stimulus checks and day trading2. While this may describe the behavior of a subsegment of retail investors, we believe the increased activity is an acceleration (brought on by the COVID-19 pandemic) of a pre-existing trend towards greater accessibility for the average retail investor.
On the DriveWealth platform, we continue to see the behavior of investors, not day traders. Retail investors are not timing the market but rather are investing when they have time and extra cash. Our data show that retail investors around the world, of every age, are flocking to digital brokerage experiences. We believe there are four key factors driving this engagement: ease of use, affordable entry points, first time access, and lower fees.
Fractional share technology is a big piece of this puzzle. Now retail investors can buy what they can afford, when they can afford it without having to save up to buy a single share of a high-priced stock.
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