Stake, a US stock market trading platform, analyzed internal retail investor and hedge fund data from the HFM and found that retail investors made 47% profit last year on average. That is almost three times more than hedge funds, whose average performance was 12.3%. Equity funds came in second, ending the year with 19.4% profit.
Retail investment surged in popularity amid the COVID-19 pandemic and the consequent expansive monetary and budget policy from the central bank and government, respectively. That, together with the retail trading platforms – especially equity options trading – led to more participation of the masses. In 2020, retail investors were accounting for 20% of the market’s trades, according to Citadel Securities. In 2019, they only represented 10%.
Stake experienced similarly high growth, acquiring 400% more customers in 2020 compared to the year before, and 75,000 new registrations in the first month of 2021 alone, according to the official statement. This growing trend in investment led the firm to analyze investors’ performance, only to conclude they came out on top in 2020.
Tesla, Amazon, and Nio were the top choices for retail investors, but ‘Green’ companies attracted a significant amount of interest, such as clean energy ETFs among the most popular thematic funds.
Matthew Leibowitz, CEO of Stake, said: “While the recent volatility and market interest has contributed to our growth, it’s really just the tip of the iceberg of a deeper trend that has been fuelling rapid growth through 2020 and into 2021. More and more retail investors are recognizing the incredible opportunity of the US market, one worth $37T and home to some of the world’s largest and most exciting companies. So far this year, 75,000 customers across the globe signed up to Stake and we have seen over 500,000 trades executed totaling over $800 million USD.
“While this has been an unprecedented time for the markets, we expect to see interest in the US market continue to increase and will relentlessly keep pursuing our mission of providing access to the US market to our growing customer base, no matter who they are or where they’re from”, Mr. Leibowitz added.
Stake’s trading offering includes 4,000 US stocks and ETFs in a pricing structure of a 0.5% FX USD transfer fee on deposits and withdrawals. The Australia-based trading platform was launched in the UK in early 2020. The firm was founded in 2017 to address the barriers to opening a US brokerage account from the UK, with US tax considerations and forms to fill in. By streamlining the sign-up process and automating the documentation including the hefty W8-Ben form directly with its US dealer, Stake made it quicker and easier to get set up.
