EXCLUSIVE: Investor Appetite Shifts Towards Bonds, Embracing Small Bites Of Risk

Investor interests have evolved in the post-Covid era, now characterized by a 5% interest rate landscape. Several experienced brokerage industry players shared their views on how investor behavior has changed following the pandemic, and their roadmap for the next 3–4 years on Monday at the Benzinga Fintech Deal Day & Awards.

The panel was “Empowering Self-Directed Financial Services: Tools and Resources” with ViewTrade’s Barry Bernstein as the moderator.

Rishi Khanna, CEO of Stocktwits, a social media platform for individual investors and traders, recognized an increase in retail engagement during the Covid period. Khanna believes that the markets have moved past the GameStop Corp GME and memestock craze. Across generations, from Baby Boomers to Gen X, Millennials, and Gen Z, each group has shown a slower pace in entering the markets, with even the most active investors pulling back.

Khanna’s “verticalized Twitter” platform is known for using cashtags to organize conversations. The Stocktwits is now focused on bringing community data such as sentiment data, trending data to the forefront, while taking the help of generative AI. Khanna sees significant value in fostering social engagement among retail investors.

Lule Demmissie, U.S. CEO at eToro, another social investing platform with innovations like copy trading, offered an alternate view of post-Covid investors. Demmissie attributes the exponential growth of retail investments not to Covid, which she considers “wrong analysis” but to “systemic things” such as technology and ease of access. At the peak of Covid, “60%+ of trading was happening on the mobile app,” she exclaimed.

Demmissie identified social network, software access, fractionalization and zero days in options as key drivers for continued participation from retail investors. “Investors have realized that I can take more at bats in smaller bites” which makes simplicity and fractionalization so phenomenal, she said. This, she believes, is a secular trend and not necessarily a moment in time.

In terms of a roadmap, eToro’s focus is on fixed income, options and futures innovations, and the use of generative AI to innovate.

Abdul Zoheb, CEO and Co-Founder of UpLeg also shared his view at the panel discussion. Zoheb’s startup offers customized API solutions and trading technology and is primarily focused on influencers. The startup founder believes that Covid helped his company offer immersive educational content to users. The ability to visualize their trade or chat within the community before they actually place an order, is key to retail investor’s trading appetite, Zoheb said.

Steve Sanders, Executive VP of Marketing & Product Development at Interactive Brokers Group Inc IBKR also shared his wisdom with the audience. Sanders has been with IBKR for 23 years, a firm that manages about 2.5 million accounts worldwide. IBKR has a very focused cohort of users comprising professional active traders, sophisticated investors as well as institutions.

The firm started out just with options trading and focused on the U.S. It now has 80% of accounts coming from outside the U.S. Sanders identified the Middle East, Asia, and Europe as strong markets for the firm currently. “Anytime there is political or financial volatility in an economy, we see an uptick in accounts from that particular country,” Sanders noted.

Looking ahead, Interactive Brokers will be focusing on new markets (Taiwan, Eastern Europe) and bonds. Sanders disclosed that the company’s bond marketplace didn’t have that many takers five years ago at launch. Over the past year, however, there’s been a huge uptick in bonds.

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Photo: Pratya Jankong

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