e*trade financial q3 2020 streetwise report · 8 hours ago · the panel is broken into thirds of...

E*TRADE FINANCIALQ3 2020 STREETWISEREPORTInsights from the E*TRADE quarterly tracking study of 800+ experienced investors

Public

© 2020 E*TRADE Financial Corporation. All rights reserved.

2

Q3 2020 survey methodology and backgroundMethodology

This wave of the survey was conducted from July 1 to July 9 of

2020, among an online US sample of 873 self-directed active

investors who manage at least $10,000 in an online brokerage

account. The survey has a margin of error of ±3.20 percent at the 95

percent confidence level. It was fielded and administered by Dynata.

The panel is broken into thirds of active (trade more than once a

week), swing (trade less than once a week but more than once a

month), and passive (trade less than once a month). The panel is

63% male and 37% female, with an even distribution across online

brokerages, geographic regions, and age bands.

This study looks into the minds and behaviors of self-

identified experienced investors

• They self-select as having moderate to professional investing

experience

• They take charge of their investments

• They believe they understand the markets, investment products,

and asset classes

-50%

-40%

-30%

-20%

-10%

0%

10%

-5%

0%

5%

10%

15%

20%

Apr-2020 May-2020 Jun-2020

S&P 500 DJIA VIX

Q3 2020 survey timing mapped against major market indexes

S&P 500®/DJIA

Survey in the field

7/97/1VIX®

3

SENTIMENT

VIEWS ON THE MARKET AND WHERE

OPPORTUNITIES LIE

4 Public

0%

10%

20%

30%

40%

Q3'19 Q4'19 Q1'20 Q2'20 Q3'20Dazed and Confused Easy Rider

Singin' in the Rain Pulp Fiction

Raging Bull Jackass

Apocalypse Now Fear and Loathing in Las Vegas

If you had to pick a movie title that best describes how you personally feel

about the market this quarter, which would it be?

61% 50% 61%

38%51%

39%50%

39%62%

49%

Q3'19 Q4'19 Q1'20 Q2'20 Q3'20

Bullish Bearish

When it comes to the current market, are you…?

Bullishness rose significantly A majority of the population thinks the market will rise

Investors are more “Dazed and Confused” but less “Apocalypse Now”

Where do you predict the market will end this quarter?

Views on the market

4

5

15%

34%29%

13%9%

14%

31% 30%

15%10%

A B C D F

Q3'20

Q2'20

Views on the economy and rates

What grade would you give the Fed for how it has handled the

current situation?

10%

20%

30%

40%

50%

Q3'19 Q4'19 Q1'20 Q2'20 Q3'20

Market volatility Recession Political instability Inflation Interest rates

What risks are you actively managing right now when it comes to your portfolio?

Most would grade the Fed a B or C

Volatility and recession concerns remain high while political instability concerns ticked up

4%

19%

40%

28%

9%5%

11%

29%36%

19%

A B C D F

Q3'20

Q2'20

The majority of investors would give the US economy a C

grade or lower

What grade would you give the current state of the US economy

right now?

5

6

52%46%

41% 38%34% 33%

28% 26%

18% 14%

52%43% 42%

37% 35% 34%28%

23% 22%15%

51% 48%

41% 39%32%

38%

29% 25%

19% 16%

Individual stocks Equity mutualfunds

Money marketfunds or other

cash alternatives

Fixed incomemutual funds

Bonds ETFs CDs Investableproperties

Treasury bills Commodities

Q3'20

Q2'20

Q3'19

Asset class interestInterest in individual stocks and equity mutual funds remains high

Interest in large, mid, and small caps and international companies in developed markets ticked up Q/Q

If you could give one piece of advice to a friend or family member who is thinking of investing right now, would it be to get into…

Select your top four.1 (Top 10 shown.)

How interested/comfortable are you with investing in each of the following sectors this quarter?1 (% Very/extremely interested; base=all)

43%

32%29%

23% 22% 20% 19% 18%

41%

31%27%

20%23%

18% 17%19%

46%

38%32%

23%24% 23%

19% 18%

Large US companies(large cap)

Mid-sized UScompanies (mid cap)

Small US companies(small cap)

Internationalcompanies in

developed markets

Domestic bonds/debt Internationalcompanies in emerging

markets

Internationalbonds/debt issued in

emerging markets

Internationalbonds/debt issued indeveloped markets

1. Focuses on Y/Y and Q/Q—other quarters available upon request

7

US sector interest

57%

47%

33%

27% 26%23%

20%

15% 15%14%

58%

38%42%

26% 26%

21%

28%

14%18%

11%

49%47%

25% 23%

41%

35%

26%

21%

16%18%

Q3'20

Q2'20

Q3'19

What industries do you think offer the most potential this quarter? Select your top three.1 (Top 10 shown.)

Interest in tech spiked while defensive sectors like consumer staples and utilities declined Q/Q

1. Focuses on y/y and q/q—other quarters available upon request

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% Interested Q/Q Δ

United States and Canada 65% 0%

Asia and Pacific 41% +4%

European Union 36% +9%

Central, Eastern, and Southeastern

Europe (including Russia) 11% (2%)

Middle East and Central Asia Region

(including North Africa) 10% (1%)

Latin America and the Caribbean 11% 0%

Sub-Saharan Africa 6% +1%

39%

29%32%32%

25%

43%45%

31%

24%

Agree Neither agree nordisagree

Disagree

Q3'20

Q2'20

Q3'19

International and emerging market interest

Which regions do you think offer the greatest investment potential this quarter?1 (% = Top two boxes)

21% 55% 24%

Lessen exposure to emerging markets

Not make any adjustments

Increase exposure to emerging markets

Thinking about your investment approach specific to emerging

markets, which of the following adjustments do you plan to make over

the next quarter?

The health of the markets outside the US appeals to me as an

investor. (% = Strongly/somewhat)

Appeal of markets outside US increased

Interest in the European Union and Asia/Pacific increased

Most investors are not making changes to EM exposure

1. Change shown Q/Q from Q2’20.

9

PORTFOLIO MANAGEMENT A LOOK AT HOW DIFFERENT AGE GROUPS MANAGE THEIR

INVESTMENTS

10

25%

25%

39%

24%

29%

34%

23%

25%

18%

28%

21%

9%

AGE: 55+

AGE: 35–54

AGE: 25–34

At least once a day Weekly Monthly Once a month or less

Millennial, Gen X, and Baby Boomer broker preferences and portfolio management

How often do you evaluate the positions in your portfolio?

“Millennials” defined as age 25–34, “Gen X” defined as age 35–54, “Baby Boomers” defined as age 55+.

Almost two out of five Millennials check their portfolio at least once a day

Which of the following characters better represents the type of relationship you want with your broker?

80%

20%

AGE: 25–34

69%

31%

AGE: 35–54

71%

29%

AGE: 55+

R2D2. A copilot with a diverse skill set that

offers a variety of helpful tools.

C-3PO. A constant companion that

will only offer you advice.

Investors of all ages prefer a broker like R2D2, offering a variety of helpful tools

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Mobile usage among Millennials, Gen X, and Baby Boomers

80% 74% 68% 67% 61% 60%67% 61% 62%43% 38% 40%38%

28%

55%

15% 11% 9%

brokerage's mobile app positively not ideal wearable voice chatbots

To what extent do you agree or disagree with the following statements…(% = Strongly/Somewhat agree)

“I am interested in using

wearable technologies, like

smart watches, to monitor

my portfolio.”

“I am interested in using a

voice assistant (e.g., Siri,

Amazon Alexa) to manage my

portfolio.”

“Investing/trading apps

have positively affected

the way I handle my

investments.”

Which of the following would you be most likely to use a voice assistant (e.g., Siri,

Amazon Alexa) to do when it comes to investing and trading?(Select top two.)

Approximately how often do you use an investing and trading app

on your smartphone?

20%

6%

5%

10%

59%

AGE: 55+

45%

9%

7%13%

26%

AGE: 35–54

57%26%

5%5%7%

AGE: 25–34

“It is important to me that my

app has robust capabilities

that rival the website

experience.”


Almost two thirds of Boomers would use a voice assistant

to check their portfolio and check the markets

Over half of Millennials use an investing app once a

week or more

Four out of five Millennials say it’s important that their mobile app has robust capabilities that rival the website experience

Once a week or more 2–3 times each monthAbout once per month Less than once per monthI do not have an investing app

“I am interested in using

chatbots to manage my

portfolio.”

58%52%

46%

29%

12%

3%

58%

40%

63%

27%

9% 4%

65%

29%

65%

29%

12%

0%

Check yourportfolio

Check yourwatch list

Check themarkets

Receivenotificationsabout stockmovement

Receivenotifications

aboutaccountactivity

Place trades

AGE: 25–34

AGE: 35–54

AGE: 55+

“While not ideal, I understand that

my brokerage's digital platform

may not always work during

extreme volatility and customer

trading volume.”

12

VIEWS ON RETIREMENT HOW EXPERIENCED INVESTORS THINK

ABOUT RETIREMENT INVESTING

13

41% 40% 40% 39% 38% 37%

23% 28%21% 25% 24%

18%

3%9% 10%

20%8% 12%

Loss of a job Not having enough savedfor retirement

Not understanding how toinvest smartly

Loss of a loved one Personal relationshipissues

Physical injury

Retirement investing among Millennials, Gen X, and Baby Boomers

44% 43% 40% 37% 35%28% 25% 25%

73%

48% 49%

25%34%

17%12%

24%

79%

55% 54%

23%

44%

9% 6% 3%

For retirement For an unknownemergency

Simply because it'sthe right thing to do

For a big purchasesuch as a car or new

home

For vacation orentertainment

To get rich To take care of aparent or other older

relative

To pay for aneducation

AGE: 25–34

AGE: 35–54

AGE: 55+

What are the main reasons you are saving for the long term? (% = Selected as a top three choice.)

How often do you worry about each of the following? (% = Always/frequently)


Retirement worries rival loss of a job, loss of a loved one

Retirement is the highest single priority for long-term saving, although significantly less so for Millennials

14


Please rank in order how important each of the following are in meeting your goal for retirement, with one being the most important.

(% = Selected as most important)

77%

64%

26%

12%13%

6%

AGE: 35–54

50%

59%39%

12%

32%

6%

AGE: 55+

Personal savings/IRA

401(k) Pension

Annuity

Social Security

Other/None of the above


All generations rely most on 401(k)s and personal savings/IRAs when it comes to retirement

63%

51%31%

28%

15%

10%

AGE: 25–34

15

54%

16%

32%

Percentage who have taken out money from

an IRA or 401(k) before the age of 59½

46%

21% 19% 18% 17%

68%

9% 13% 8% 8%

84%

0%7% 4% 1%

No, I have never takenout money from an IRAor 401(k) before the age

of 59½

Yes, to pay foreducation

Yes, to make a largepurchase

Yes, because Ibecame unemployed

Yes, for a medicalemergency

AGE: 25–34

AGE: 35–54

AGE: 55+

Have you ever taken out money from an IRA or 401(k) before the age of 59½ and, if so, for what? (Select all that apply.)


Have you ever regretted your decision to take money from an IRA or 401(k) before the age of 59½?

22%

27%51%

AGE: 55+

49%

21%

30%

AGE: 35–54

Very much/somewhat regretted

Regretted a little bit

Did not regret at all

67%22%

11%

AGE: 25–34


Most Millennials and Gen X later regret the decision to take early retirement withdrawals

Despite their reliance on retirement accounts, more than half of Millennials made an early withdrawal

16

61% 60% 59% 59%53% 52% 52% 51% 49%47%

36%

50%

41%35% 32% 29%

24% 25%

17%10%

29%

18%16% 15%

6%8% 10%

Rent or mortgage Education costs orpaying downstudent loans

Health care costs Living expenseslike food or utilities

Wanting to live fortoday

Retail shoppingand/or eating at

restaurants

Childcare Having a parentmove in with you

Having an olderchild move back in

with you


When it comes to saving what you want for retirement, how much of a barrier is each of the following?

(% = Significant/somewhat of a barrier)


Boomers recommend to start early, get the match, and avoid timing the market

Millennials cite several roadblocks with housing costs topping the list and student loans a close second

82%

61% 60%54%

33%

7% 3%

80%

54% 53%58%

32%

14%7%

67%

56% 49%56%

37%23%

12%

Start saving as early aspossible

Save enough to get theemployer match on your

401(k) contribution

Invest for the long term,don't try to time the

market

Pay down debt asquickly as possible

Don't dip into yourretirement account early

Work with a financialadvisor to create a plan

Use online tools tounderstand and keeptrack of your financial

goals

AGE: 55+ AGE: 35–54 AGE: 25–34

If you could offer a younger investor financial advice, what would it be? (Select top three)

17

Please read the important disclosures belowThis presentation presents data from July 1–July 9, 2020.

The data from this and past quarters reflects the opinions of this population only from the time of fielding, which is typically the first two weeks of each quarter. It does not

represent opinions of the full quarter.

E*TRADE Financial Corporation and Dynata are separate companies that are not affiliated. E*TRADE Financial Corporation engages Dynata to program, field, and tabulate the

study.

All information in this presentation reflects results from the survey and should not be construed as reflecting the views of E*TRADE Financial, its affiliates, or Dynata. The results

herein do not constitute a recommendation or endorsement by E*TRADE Financial, its affiliates, or Dynata.

Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an

index.

Dow Jones Industrial Average: Computed by summing the prices of the stocks of 30 companies and then dividing that total by an adjusted value—one which has been

adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying

securities.

S&P 500® Index is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the US stock market.

All components of the S&P 500 are assigned to at least one of eleven S&P Select Sector Indexes, which track major economic segments and are highly liquid benchmarks.

Stock classifications are based on the Global Industry Classification Standard. The Select Sector Indexes are: Communication Services Select Sector, Consumer Discretionary

Select Sector; Consumer Staples Select Sector; Energy Select Sector; Financials Select Sector; Health Care Select Sector; Industrials Select Sector; Materials Select Sector,

Real Estate Select Sector, Technology Select Sector; and Utilities Select Sector.

VIX® is the ticker symbol for Cboe Volatility Index®. The index, also called the fear index, is calculated by Cboe and generally measures expected volatility of the US market in

the next 30 days. The higher the number, the more bearish the market is in general. The VIX is used to calculate the put/call ratio.

E*TRADE Financial, E*TRADE, and the E*TRADE logo are trademarks or registered trademarks of E*TRADE Financial Corporation.

All other product names are trademarks or registered trademarks of their respective holders.

© 2020 E*TRADE Financial Corporation. All rights reserved.

e*trade financial q3 2020 streetwise report · 8 hours ago · the panel is broken into thirds of...

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