survey finds ESG remains a point of contention among retail investors

Rick Steves

The Public 1H 2023 report sheds light on the shifting dynamics of retail investor behavior and strategies. As investors increasingly diversify portfolios, harness AI for research, and grapple with economic uncertainties, the investment landscape continues to evolve. 

Public, a cutting-edge investment platform offering a range of investment options including stocks, ETFs, crypto, and alternative assets, has released its 1H 2023 report.

Based on a comprehensive survey of over 2,000 retail investors and a thorough analysis of investment flows, the report unveils noteworthy trends and shifts in the strategies of retail investors.

The findings highlight an evolving landscape where investors are diversifying portfolios, harnessing AI for research, and prioritizing investments in artificial intelligence and ETFs.

Retail investors diversifying across asset classes

The report highlights that retail investors in 2023 are actively diversifying their investment portfolios, spanning across various asset classes and strategies. Emerging megatrends and cultural events are driving investors to explore new investment avenues, striking a balance between growth plays and fixed-income strategies.

Key Points:

  • Retail investors using the Public platform have increased the number of distinct asset classes owned by 25% year-over-year.
  • ETFs’ share of portfolio assets under management (AUM) on Public has surged 4.4 times year-over-year.
  • AI thematic ETFs witnessed a 34% YoY increase in net new investors, with Nvidia (NVDA) capturing significant interest.
  • Cultural moments translated into new investors; the number of investors in companies like Mattel (MAT) and AB InBev (BUD) spiked due to positive and negative buzz.
  • AI-Powered Research and Due Diligence

Retail investors are placing a growing emphasis on due diligence and research, turning to artificial intelligence to inform their investment decisions.

The survey reveals that nearly one-fifth of retail investors are already using AI for investment research:

  • 69.4% of surveyed investors prioritize trust and credibility in financial information sources, with this factor being “significantly” more important in 2023 compared to the previous year.
  • 19% of retail investors currently employ AI for investment research, with an eagerness to learn about leveraging AI for portfolio strategies.
  • AI is emerging as a balancing force against social media as a primary source for investment decision-making.

Divide over importance of ESG

The report uncovers that while retail investors approach the rest of 2023 with confidence, their sentiments regarding the economy are mixed. Furthermore, they grapple with their roles as shareholders and display a divide over the importance of Environmental, Social, and Governance (ESG) considerations.

  • 59.9% of retail investors hold an optimistic or neutral outlook on the economy, while 40.1% remain pessimistic.
  • 31.1% of investors reported an increased risk appetite by mid-2023, compared to 16.7% at the beginning of the year.
  • ESG remains a point of contention, with 55% expressing anti-ESG sentiment and 45% favoring pro-ESG values.
  • Retail investors’ engagement in proxy votes increased, with challenges cited as a lack of awareness and context.

The Public 1H 2023 report sheds light on the shifting dynamics of retail investor behavior and strategies. As investors increasingly diversify portfolios, harness AI for research, and grapple with economic uncertainties, the investment landscape continues to evolve.

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