Stock Market Report: Fewer Individual Investors Active, But Newcomers on the Rise

2024-04-29 16:18:00

Fewer individual investors are active in the stock market. This is what emerges from the Financial Markets Authority’s (AMF) quarterly inventory of the place of individuals in the stock market universe. It shows that 737,000 people bought or sold shares at least once during the first three months of the year. Its number is down slightly by 1.2% compared to the same period the previous year, according to the French stock market monitor.

On the other hand, the number of new investors is increasing. These new investors, that is to say individuals who made their first transaction on the stock market in the first quarter of 2024, are more numerous than a year ago (59,000), the AMF shows, without quantifying this increase.

The AMF barometer is included in the category “ new investors », individuals for whom no stock market transaction has been recorded since 2018, and for whom there is no data prior to that year.

Listed funds are gaining popularity

In addition, the stock market watch notes that “ the increasing use of exchange-traded funds (ETFs) by retail investors ”, in his press release. An ETF (exchange traded fund) is an investment vehicle listed on a stock exchange. First popular in the United States, it is generally used to replicate the performance of a stock market index, in passive management, ie without manager intervention.

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Since the end of February, the AMF has changed its regulations to authorize active ETFs, an investment vehicle that depends on the intervention of a professional asset manager that will seek, not to replicate, but to beat the performance of the market.

Of 737,000 active individual investors, 216,000 bought or sold at least one ETF in the first quarter, or 36% more than in the first three months of the previous year, according to the AMF. Among those buyers, 53,000 made their first investment through an ETF. And for the first time, in the first quarter of 2024, “ the number of transactions made on ETFs admitted to trading in Europe is more than a million », continues the institution.

Finally, the average age of individual investors in ETFs rose from more than 60 years in 2018 and 2019 to 48 years last year, according to the AMF, which announced the publication of a study aimed at investors in ETFs during the year.

Individuals who were already less active in the stock market in 2023

During all of 2023, 1.538 million individuals in France made at least one transaction on financial products such as stocks, the panel of active individual investors of the AMF, published every quarter, showed in January.

This figure is down 8.83% compared to 2022 and 10.16% compared to the peak of 2021, according to data published by the AMF. As a result of the IPO Française des Jeux at the end of 2019, and then back on the markets after the drop in prices that came with the arrival of Covid-19 in Europe, the interest of the individual in financial products increased significantly.

The AMF has been carrying out this study since 2018, which only includes ” financial instruments listed in the European Union » available through investment service providers. Therefore it does not take into account transactions made in the foreign exchange market or even bitcoin.

11% drop in transactions over one year

The number of transactions carried out in 2023 falls by 11% year on year, to 37.7 million, concludes the AMF. The decrease is particularly visible in stocks, which are the main financial instrument used by individuals: barely 1.3 million people bought or sold them in 2023, compared to 1.5 in 2022.

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On the other hand, passive investment through ETFs, funds that aim to replicate the performance of an index, such as the CAC 40, was very popular last year: the number of investors increased by 18% in 2023 , to reach a new record with almost 300,000 people.

This trend is observed worldwide: in the United States, assets managed in passively managed funds surpassed those actively managed for the first time at the end of 2023, financial data provider Morningstar revealed in mid-January .

(By AFP)