With the US presidential election drawing closer, nearly half of American retail investors are adjusting their portfolios. A recent survey revealed that some of the investors are strengthening their cash reserves while others are targeting opportunities in equities and crypto assets.

Investors Adapt Strategies

The survey by eToro showed that 49% of American retail investors have either already adjusted or plan to adjust their portfolios due to the upcoming presidential election.

The study, which included responses from 1,000 US retail investors, showed that a significant portion of investors is increasing their cash holdings, with 42% of respondents favoring a more liquid position. Another 35% are buying more stocks, while 20% are venturing into crypto.

Interestingly, the study highlighted a generational divide in how investors are reacting to election-driven uncertainty. Younger investors, particularly Gen Z (69%) and Millennials (68%) are the most proactive in adjusting their portfolios.

Millennials are over twice as likely as their Boomer counterparts to have already made portfolio changes, with 32% of Millennials shifting their investments compared to 14% of Boomers.

Conversely, older generations are largely sticking with their existing plans. More than half of Gen X (51%), Boomers (63%), and the Silent Generation (60%) say they will not make adjustments before the election.

While Millennials and Gen Z are increasingly buying stocks, with almost half of Gen Z (49%) doing so, older investors, including Boomers (43%) and the Silent Generation (47%), are focusing on increasing cash allocations.

Financial Services

Despite the looming election, the overall investment sentiment remains positive toward certain sectors. Financial services continue to dominate as the top-held sector among retail investors, with 58% maintaining or increasing their exposure.

Technology (51%) and energy (41%) are also popular, though generational differences have become more apparent over time. Both Gen Z (68%) and the Silent Generation (55%) increased their tech ownership significantly from the previous quarter, while other generations were more reserved.

This indicates a willingness among the youngest and oldest investors to buy into tech despite recent volatility. Among the top seven high-profile technology giants, retail investors are particularly interested in Amazon, with 26% planning to increase their holdings in the company.

In contrast, Tesla ranked as the least popular among these tech giants, with 36% of respondents indicating they do not plan to invest in it, followed closely by Alphabet (35%) and Nvidia (34%).

Source