LIVE MARKETS-Retail investor boom here to stay, says Jefferies

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RETAIL INVESTOR BOOM HERE TO STAY, SAYS JEFFERIES

Retail investing is on the rise in the United States, fueled by greater access to investing knowledge, products tailored to individuals and digital platforms combining trading services, and they're here to stay says Jefferies.

Retail participation has become an integral component of the trading ecosystem, representing over 20% of the U.S. trading volumes, said Jefferies strategists led by Steven DeSanctis.

Since the COVID-19 outbreak in 2020, when growing numbers of quarantined investors focused on their portfolios, retail participation in the market has seen a sharp growth.

Their growth reflected in new accounts additions and growth in client assets, among trading and asset management platforms including Interactive Brokers Group IBKR.O and Charles Schwab SCHW.N.

"Retail interest is here to stay; institutional investors should adjust their strategies accordingly," DeSanctis said.

AI enthusiasm has also helped boost retail interest.

"It is hard to isolate a bull market from the growing sophistication of the retail investor," the brokerage said.

"However, there is some correlation, and the desire to own US stocks, in particular the Mag 7, has also been a key driver of increased retail participation globally," they added.

Under the influence of retail investors, Jefferies expects volatility triggered by behavioural biases to remain high, and a preference for near-term winning stocks to remain on the cards.

Heading into 2026, some of the tailwinds for sustained retail activity include the rise in adoption of crypto currencies as a mainstream asset class, sports betting, increased overnight trading and growth opportunities outside the U.S., DeSanctis notes.

(Kanchana Chakravarty)

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