DriveWealth, LLC, a fintech investment rail and pioneer in fractional investing, released its DriveTrends study, “The Year of The Millennial Trader: Trading Remained Trendy Despite Market Uncertainty,” a look at how the bear market many investors have faced impacted trading behaviors of millions across APAC, EMEA, LATAM, and U.S. in the first half of 2022.
The research study analyzes data of more than 12 million investors worldwide who trade shares of U.S. equities through DriveWealth’s network of 100+ global partners, including Block Inc.’s Cash App, Revolut, and Navy Federal Financial Group. Even amid market lows, data shows trading remained popular among Millennials, a demographic that continues to demand more access to traditional and alternative investment products and tools.
The report showcases how Millennials’ increasing preference for innovations like fractional equity trades and diversified portfolios have shaped a new market for digital wallet app users, which is anticipated to exceed 4.4 billion by 2025, according to the Juniper Research.
What does this demand increase mean for fintechs?
“The ability for providers to offer fractionalized trading has provided a whole new segment of consumers with the opportunity to access wealth creating markets using the smartphones they already own,” commented Harry Temkin, Chief Information Officer at DriveWealth.
“Millennials are motivating fintechs and neobanks to innovate their product suite to improve access to U.S. equities and financial literacy tools in underserved markets. Our recent partnerships with companies like Toss Securities, Goalsetter, and Sproutfi are testaments to the amount of power Millennials have to shape the financial ecosystem at large – all they need is an investment button that’s now accessible in the palm of their hand,” Temkin said.
What were the key insights of the study?
Based on data from the first half of 20221, key takeaways from the report include:
- Millennials represented the largest proportion of new investment account openings worldwide at 46%. While data showed that almost half of Gen-Z investors opened their first account during the March 2020 to August 2021 period (representing a large and growing market share of investors), Gen-Z scaled back while Millennials took the lead.
This could signal an influx of cash into investment platforms that meet their investing needs, as U.S. Millennial wealth more than doubled from the 4th quarter of 2019 to end of 2021.
- While ‘meme stocks’ and Reddit comments continued to inspire news headlines, the report shows global investors (especially younger ones) gravitated toward more tried-and-true names. AAPL, TSLA, and AMZN retain their position as the top three symbols traded.
- Millennials represented both the highest average trades per account (19) worldwide and the largest proportion of trades in each region. This generation drove:
- 94% of trades in APAC
- 69% of trades in EMEA
- 53% of trades in LATAM
- 53% of trades in the U.S.
- Across the U.S., LATAM, and EMEA, approximately 96% of all activity was driven by fractionalized trades through DriveWealth’s platform. This is a measurable increase from the second half of 2020, where fractional trades drove 92% of global activity.
- The top two traded symbols among Millennials in APAC were TQQQ and SQQQ, triple-leveraged ETFs that track a Nasdaq 100 index ETF, QQQ. Known as a high-risk sector, this means Millennials may be motivated by riskier investments with potential for high returns.
How are digital tools changing the investment landscape?
“As we dive deeper into the Decade of the Digital Investor, we’re seeing a paradigm shift in investing. Despite market uncertainty, people – especially younger investors – are still investing in the brands they love using digital tools that are making markets accessible and affordable for them,” commented Gayathri Rajan, Chief Product Officer at DriveWealth.
“As a pioneer of fractional trading, we’re excited to work with our partners to develop even more ways for investors worldwide to access the markets through our API-based platform.”