Retail investors back UK and US but sentiment down for other markets

Source: Trustnet

UK retail investors continue to favour domestic and US stocks for long-term returns, with sentiment towards other global regions and leading tech stocks starting to retreat, according to eToro’s latest survey.

The platform’s Retail Investor Beat study found 36% of UK retail investors see the UK as offering the best long-term return potential, closely followed by the US at 35%. These figures remain stable compared to previous quarters and far outpace other markets.

Confidence in other regions fell notably in 2025’s third quarter following a temporary rise in the previous three months. The share of retail investors favouring China dropped from 31% to 23%, emerging markets from 23% to 20%, Europe from 20% to 18% and Japan from 17% to 15%.

Lale Akoner, global market strategist at eToro, said: “Earlier this year, heightened concerns around political instability and macroeconomic uncertainty in the US prompted retail investors to diversify more aggressively into Europe and emerging markets, often scaling back US exposure. 

“Interest in the UK has remained consistent and resilient throughout this year. However, as confidence in the resilience of the US economy improves, we’re seeing a reversal of the broad diversification trend.

“Portfolios are once again tilting back toward the US, reflecting recognition that the American market remains the cornerstone of global investing. Retail investors are effectively balancing diversification with a clear acknowledgement that long-term growth opportunities are still heavily anchored in the US.”

Expectations that the US tech companies known as the Magnificent Seven (Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia and Tesla) will continue to outperform the wider market also declined.

Only 41% expect them to outperform, the lowest on record and down from 47% last quarter. Just 13% expect them to significantly outperform, suggesting reduced appetite for concentrated tech exposure.

"The so-called ‘Magnificent Seven’ have dominated markets in recent years, but rising concentration risk is prompting investors to reassess. The latest data shows retail investors are trimming exposure, not because they doubt the long-term potential of these companies, but because overreliance on a handful of tech giants leaves portfolios vulnerable in a volatile environment,” Akoner said.

“This shift signals a more disciplined approach: investors are acknowledging the Magnificent Seven’s strength while actively rebalancing to improve diversification. It reflects a maturing mindset among retail investors – moving from chasing performance to managing risk more strategically.”

Concerns over a global recession have eased, with the share of investors citing it as the top threat to portfolios declining from 25% to 20%. Inflation concerns remained steady, rising marginally from 17% to 18%.

The findings are based on a survey of 1,000 UK retail investors conducted by Opinium between 5 and 19 August 2025. Respondents qualified as retail investors by holding at least one investment product, including shares, bonds or ISAs, but did not need to be eToro customers.