With the US presidential election drawing closer,
nearly half of American retail investors are adjusting their portfolios. A
recent survey revealed that some of the investors are strengthening their cash
reserves while others are targeting opportunities in equities and crypto
assets.

Investors Adapt Strategies

The survey by eToro showed that 49% of American retail
investors have either already adjusted or plan to adjust their portfolios due
to the upcoming presidential election.

The study, which included responses from 1,000 US
retail investors, showed that a significant portion of investors is increasing
their cash holdings, with 42% of respondents favoring a more liquid position.
Another 35% are buying more stocks, while 20% are venturing into crypto.

Interestingly, the study highlighted a generational
divide in how investors are reacting to election-driven uncertainty. Younger
investors, particularly Gen Z (69%) and Millennials (68%) are the most
proactive in adjusting their portfolios.

Millennials are over twice as likely as their Boomer
counterparts to have already made portfolio changes, with 32% of Millennials
shifting their investments compared to 14% of Boomers.

Commenting on the data, eToro Analyst Bret Kenwell mentioned:
“There’s nothing wrong with investors adjusting their asset allocation ahead of
a big event, like the election. While younger investors are being a bit more
opportunistic, older investors are opting to be more passive, letting their
investment plans stay the course.”

Conversely, older generations are largely sticking
with their existing plans. More than half of Gen X (51%), Boomers (63%), and
the Silent Generation (60%) say they will not make adjustments before the
election.

While Millennials and Gen Z are increasingly buying
stocks, with almost half of Gen Z (49%) doing so, older investors, including
Boomers (43%) and the Silent Generation (47%), are focusing on increasing cash
allocations.

Financial Services

Despite the looming election, the overall investment
sentiment remains positive toward certain sectors. Financial services continue
to dominate as the top-held sector among retail investors, with 58% maintaining
or increasing their exposure.

Technology (51%) and energy (41%) are also popular,
though generational differences have become more apparent over time. Both Gen Z
(68%) and the Silent Generation (55%) increased their tech ownership
significantly from the previous quarter, while other generations were more
reserved.

This indicates a willingness among the youngest and
oldest investors to buy into tech despite recent volatility. Among the top
seven high-profile technology giants, retail investors are particularly
interested in Amazon, with 26% planning to increase their holdings in the
company.

In contrast, Tesla ranked as the least popular among
these tech giants, with 36% of respondents indicating they do not plan to
invest in it, followed closely by Alphabet (35%) and Nvidia (34%).