Individual Investing is Growing in the U.S., but Is Still Far Behind Asia

August 31, 2020

Much has been made of the increase in individual or retail investors and the impact it can have on the stock market. The Wall Street Journal recently analyzed some of the data surrounding the trend.

With the advent of Robin Hood and other apps, individuals are investing more than ever. According to the WSJ, during the first six months of the year, individual investors accounted for 19.5% of the shares traded in the U.S. stock market. This is a sizable increase from 14.9% last year and nearly double the level from 2010.

While the number is growing, we still have a long way to go before we catch up to Asia, where the individual investor truly dominates. According to the WSJ’s data, individuals often account for more than 80% of the trading activity on the Shanghai Stock Exchange. In Korea’s Kospi market, individual investors account for 84% of the shares traded this year. The article attributes this to the tech-savviness of the population and a pricing war between brokers driving commissions down to zero, as well as the region’s relatively underdeveloped mutual-fund industry.

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