Grasping The Retail Investor Opportunity

Through in-depth research and expert industry commentary we explore the behaviours, motivations and voices of 2,000 retail investors in the UK and US.

Download today and discover:
• The growing influence of Gen Z
• Increasing demand for ESG transparency
• Employee shareholder sentiment towards company share schemes
• The accelerated AGM evolution


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EXECUTIVE SUMMARY



By Paul Lynam
Group Chief Executive Officer, Equiniti


Over the last 18 months, we’ve seen non-institutional shareholders increase their access to and knowledge of equity markets – and exert growing influence over them.

Companies are responding and embracing these changes by engaging with shareholders. Communicating with investors who are also employees and customers builds loyalty and recruits powerful brand advocates. EQ has supported a record 19 IPOs in the first half of 2021, and, in many cases, this relationship with retail investors was a key consideration.

The proportion of overall capital owned by retail and employee investors compared to their institutional counterparts remains modest. But their impact in voicing displeasure can be disproportionate and amplified on social media. A large swathe of today’s retail investors are under 40 years old and can be quick to make use of technology.

This influence has grown further as individual investors understand environmental, social and governance (ESG) and other fundamental issues as they relate to corporations.

Retail investors betting on certain corporate outcomes has, in some cases, led to violent share price swings in recent months. Some large IPOs were faced with negative headlines and poor feedback, depleting investor appetite and knocking share prices. The stock price often recovers after the initial shock, providing the business fundamentals are strong. But companies can avoid such issues and minimise reputational damage by anticipating retail investors’ needs and keeping them onside.

Reflecting on this shift in the investment landscape, we’ve created a report that deepens understanding of the behaviour and motivations of retail investors. Our hope is that its findings can support companies in reviewing their practice, reporting and communication to better respond to the opportunities and challenges these changes may bring.

Survey participants include those enrolled in employee share plans and equity compensation schemes. The results show that some companies have a great opportunity to boost employee shareholder loyalty, including younger shareholders, by offering perks and discounts.

As a leading share registrar in the US and UK, we’re delighted to continue bringing insight and ideas to strengthen our industry, and to explore how companies can harness retail shareholder participation for their mutual benefit, if they so choose.

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