In case you needed any more evidence of the rising influence of retail investors, Saxo Bank Group's 2020 results provide it.
In 2020 Saxo reported it brought on a record 238,000 new active clients globally. This brought its total number of active clients to 660,000, also a record for the company.
Huge Aussie retail investor growth
Adam Smith, CEO Saxo Capital Markets Australia, told the Motley Fool that Saxo's Australian trading client base had also seen phenomenal growth, up 56% in 2020. And the number of new clients who placed their first trade with Saxo in 2020 increased 114%.
Kim Fournais, CEO and founder of Saxo Bank, cited, "a seismic shift that has sparked much greater participation in financial markets."
Fournais added:
[T]he empowerment of retail investors is fundamentally positive – as they take ownership of their investments to better navigate their financial future, and also harness the benefits of long-term compounded growth, that only investments can offer over time.
The incoming tide of ASX retail investors
So what's driving ever more Aussies to invest in shares?
According to Adam Smith:
In recent years retail investment has been on the rise with people increasingly driven towards self-directed investing and trading. Meanwhile the events of the past year have accelerated the move to online retail investment, much in the same way as we've seen ecommerce going through the roof – it's simply a build on an existing trend.
Smith says that Saxo's investments into its digital platforms and the breadth of its products have helped drive its success, enabling the company, "to develop a level of quality and choice that's ultimately built trust within our growing customer base."
According to Smith, Australian investors are increasingly keen to invest in international shares. The recent GameStop Corp. (NYSE: GME) phenomenon is also sending more clients to Saxo's doorstep.
We have seen a lot of stock and ESG investors come to Saxo looking for access to global markets as the breadth of our international stock and ETF offering is unique in the local market.
More recently, since GameStop hit the headlines, clients have contacted us regarding short squeeze stocks and how to manage risk around those investments.
There is no doubt that GameStop accelerated interest in retail investment, but that trend towards greater participation in financial markets already existed. Especially throughout 2020 when investors saw opportunity in the volatility of the capital markets and felt empowered to take advantage of it.
This empowerment is in part down to the availability of digital trading platforms, as well as access to the advice and resources required to undertake risk management.
Smith stresses that brokers have "a huge responsibility" to educate newbie investors on this front. While times of volatility provide some big opportunities, those do not come without risk.
With far more investors in the world than traders, he says Saxo will continue its focus on offering international investment opportunities.
