Katie Perry: Resilient Retail Investors Enter A New Phase Of Growth—Here's How Their Participation In The Market Has Changed

Katie Perry, General Manager of IR Innovation of Public will be speaking at the upcoming Benzinga Fintech Deal Day & Awards. Mark Nov. 13 on your calendar for the must-attend gathering in the fintech industry!

Key Takeaways:

• Retail investor participation in the stock market is at all-time highs. Investor activity remains high, but behaviors have changed.

• Retail investors are evolving beyond the single-stock mindset and are diversifying across asset classes and strategies that include everything from fixed income to AI.

• With more information and tools available, retail investors are placing greater importance on trust and credibility.

Transformations in the global financial system continue to shape and reshape how the capital markets operate—especially regarding how individuals engage in the public markets. From 2020 to 2021, roughly 30 million new brokerage accounts were opened in the United States alone.1 

These new investors aren’t going anywhere, either. In February 2023, retail investors across platforms set a new all-time high for weekly inflows, with $1.5 billion dollars pouring into the market in a single week.2 

I’ve been with the retail investing platform Public for four years (since 2019), so I’ve had a front-row seat when it comes to observing the evolution of individual investors. From increased engagement due to the lockdown to the meme stock frenzy and the subsequent volatility adjustments in 2022—one thing is clear: retail investors are resilient, and they’re not leaving.

We recently issued a comprehensive report outlining the growing sophistication of retail investors, informed by trends identified across millions of retail investors on Public and qualitative insights from 2,000+ investors. 

Here’s a summary of the key findings.

More than the meme-trader stereotype

Per the report, retail investors are increasingly diversifying across asset classes and strategies. On Public, retail investors increased the number of distinct asset classes they owned by 25% YoY from 2022 to 2023. Investors have evolved from stock-pickers to strategy seekers, and are turning to ETF products to advance their goals. ETFs’ share of portfolio AUM is up 4.4X YoY.

The report also shows that retail investors are comfortable juggling multiple strategies and investment styles at once. When asked what their top-prioritized strategies are, retail investors name dividend investing, AI, index investing, renewable energy, and big tech—in that order. While investors are drawn to disruptive innovation and other trend-based stocks, they are balancing that appetite with dividend investing, bonds, and index funds.

Fixed income, in particular, is seeing accelerated interest as retail investors evolve from YOLO to yield. U.S. Treasury bills are the most invested-in asset on Public in 2023, and investors are more actively buying into bond ETFs during the second half of the year.

Trust and credibility of financial information grows in importance

Today’s retail investors have more insights, tools, and content at their disposal than any generation before. In 2020 and 2021, social media (specifically Reddit) emerged as primary places where everyday investors gathered to share ideas. Now, retail investors view social media as a single source among many.

Amid this proliferation of investment ideas and information, retail investors are adapting by placing greater importance on trust and credibility. Put another way, they are closely vetting their sources and prioritizing the information they consume accordingly. When asked about factors that contribute to trust and credibility, investors said that having a strong reputation (75.7%), proven expertise (58.8%), and balanced/unbiased perspectives (57.5%) are most important. Least important when it comes to signaling trust: having a large social media following (10.6%).

Seeking out new ways to participate 

The report also revealed some new behaviors worth noting.

AI’s growing place: The report found that 19% of investors on Public’s platform are already using generative AI to assist them in investment research and information-gathering. A majority of those on the sidelines said that they are open to and interested in learning how to use these tools. (Public has a built-in AI research tool, Alpha, to help investors quickly synthesize complex financial data and understand market movements.)

Image is for illustrative purposes only and is not investment advice | Image via Public Alpha

Shareholder activism: 27% of retail investors reported participating in a proxy vote or AGM in the last year. With most retail investors forgoing the opportunity to make their voices heard, you might wonder, what’s keeping them? The two biggest blockers, as it turns out, have nothing to do with apathy and everything to do with awareness3. Most investors who did not vote said that it was because they were unaware it was happening, or they didn’t have enough context around what was on the ballot.

ESG’s split narrative: Retail investors are split on the role of ESG within their portfolios: 45% said it plays a role, and 55% said it does not. And while at the surface, investors appear to be neatly divided, the report found a lack of consensus understanding of what an ESG strategy is. In fact, about half of retail investors couldn’t pick a single definition.

Read Public’s retail investor report, and be sure to attend the upcoming Benzinga Fintech Deal Day to hear more insights.

[1] “Just how mighty are active retail traders?” The Economist (Aug-2021)

[2] “Retail Army Bets $1.5 Billion on Stocks,” BNN Bloomberg via JPMorgan (Jun-2023)

[3] “Wireless Investors & Apathy Obsolescence,” by Sergio Alberto Gramitto Ricci, NYU School of Law, and Christina M. Sautter, Southern Methodist University - Dedman School of Law (Jul-2023)

Disclosures: Open To The Public Investing is a member of FINRA and SIPC. This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.

This is not an investment recommendation or tax advice. Investment income on T-bills is taxed federally by the Internal Revenue Service. Income earned from T-bills is not subject to state tax, and is not subject to local income taxes. Brokerage services for US-listed, registered securities are offered by Open to the Public Investing, Inc., member FINRA & SIPC. Brokerage services for alternative assets are offered by Dalmore Group, LLC, member FINRA & SIPC. Cryptocurrency trading services are offered by Bakkt Crypto Solutions LLC (NMLS ID 1828849), which is licensed to engage in virtual currency business activity by the NYSDFS. Cryptocurrency is highly speculative, involves a high degree of risk, and has the potential for loss of the entire amount of an investment. Cryptocurrency holdings are not protected by the FDIC or SIPC. Brokerage services for U.S. Treasuries are offered by Jiko Securities, Inc., member FINRA & SIPC. Banking services are offered by Jiko Bank, a division of Mid-Central National Bank.

Securities investments: Not FDIC Insured; No Bank Guarantee; May Lose Value. 

ETFs, alternative assets, cryptocurrency, and treasury services are available to US members only. See public.com/#disclosures-main for more information.

Katie Perry, General Manager of IR Innovation of Public will be speaking at the upcoming Benzinga Fintech Deal Day & Awards. Mark Nov. 13 on your calendar for the must-attend gathering in the fintech industry!

Katie Perry is Public's General Manager of IR Innovation, overseeing B2B Partnerships and Retail Investor Insights. An early employee at the fast-growing investing platform, Katie joined as Public’s first marketing lead before launching its B2B and Media Arm, Pulse, which focuses on providing in-app content that helps people be more informed investors. 

In addition to her role at Public, Katie is a frequent thought leader and mentor on the topics of retail investing trends, financial equity, and marketing. She has spoken at events with Nasdaq, Ladies Get Paid, General Assembly, and Adweek, and was selected to the World Economic Forum working committee on the Future of Capital Markets. Prior to Public, Katie held leadership positions at Comscore and the market research tech Suzy, and has consulted Fortune 500 companies and tech startups on innovation, marketing, and brand strategy. In 2021 she was named one of Crain’s Notable Women in Marketing and featured in Adweek’s CMO Issue. She has provided mentorship to emerging talent via organizations like Morning Brew, Built by Girls, the Harlem Children’s Zone, Next Gen HQ, and Commonwealth.