eToro: International conflict surges to top of global DIY investor risk list

  • 57% of global DIY investors say international conflict poses the biggest external risk to investments, up from 26% in the fourth quarter of 2021.
  • The majority of retail investors surveyed remain confident in their portfolios (73%), with only 41% repositioning in light of these risks.
  • Home is where the heart is, 51% of DIY investors have exposure to domestic equities compared to the 28% invested in foreign equities.
  • Preference for domestic equities is driven by respondents’ knowledge of domestic markets (45%), overseas markets being too risky due to political instabilities, and currency fluctuations (21%).

Wednesday 13 April 2022: International conflict has surged to the top of global DIY investors’ risk list overtaking inflation as Russia’s invasion of Ukraine sent shockwaves through global financial markets.

According to the latest ‘Retail Investor Beat’ from social investment network eToro, 57 per cent of global respondents said international conflict poses the biggest external risk to their investments, up from 26 per cent in the fourth quarter of 2021. In Australia, this was mirrored at 57 per cent, versus 32 per cent in Q4 2021.

47 per cent of global investors remain concerned about inflation’s impact on investments, followed by the state of the global economy (37 per cent), and rising interest rates (21 per cent). Comparatively, 43 per cent of Australian investors also worry about the state of the global economy, and 38 per cent worry about rising inflation.


eToro’s Global Markets Strategist, Ben Laidler, comments: “The tragic events in Ukraine are a triple-hit to investors with its toxic combination of greater market uncertainty, higher inflation from soaring commodity prices, and lower economic growth from sanctions disruption.”

While a surge in volatility is a difficult environment for any investor to navigate, the majority of global retail investors surveyed remain confident in their portfolios (73 per cent), with only 41 per cent repositioning in light of these risks and more than half of respondents (52 per cent) planning to consistently invest the same amount of money over the next 12 months. Australian retail investors also maintain a similar opinion, with 69 per cent admitting to feeling “quite confident” in their investments, and 59 per cent confirming they have not repositioned their portfolios despite the risks.

“History shows geopolitics often does not have a long lasting impact on global markets. Fundamentals remain solid, with company profits rising, economies reopening after the pandemic, company stock market valuations now cheaper, and markets now fully expecting central banks to raise interest rates significantly,” Laidler adds.

Global DIY investors’ ability to look ahead and beyond short-term volatility is seen through their commitment to the long term investment themes they are considering. 38 per cent see opportunities in clean technology (37 per cent last quarter), digital transformation (32 per cent, down from 33 per cent), cryptoassets and digital payments (26 per cent, up from 22 per cent), robotics and automation (25 per cent, up from 24 per cent) and ageing populations (24%, up from 23 per cent).

When it comes to long term investment themes for Australian investors, the top picks include clean technology (38 per cent), digital transformation (29 per cent), ageing population (29 per cent), growth of the global middle class (23 per cent), and robotics and automation (22 per cent). 

eToro US Investment Analyst, Callie Cox, comments: “When markets are volatile and the world is going through such an awful humanitarian crisis, it may be worth  taking a step back to consider what is emotional and what is fundamental. If you take one more step back, you will see that society is resilient. The markets have shown time and time again their ability to recover.

“The lack of repositioning among DIY portfolios suggests some risk-averse investors are beginning to consider dollar-cost averaging, and invest a fixed amount on a regular basis into the markets to help smooth high volatility and ensure they do not miss an eventual recovery.”

Growing geopolitical tensions has caused some global retail investors to favour domestic markets over overseas investments and take solace in assets they are more familiar with. 51 per cent of global respondents are currently investing in domestic equities, compared to 28 per cent in foreign equities. When asked what the biggest reason they prefer domestic equities, 45 per cent of global respondents said they understand domestic markets better, 21 per cent believing overseas markets are too risky due to political instabilities and currency fluctuations. In Australia, 50 per cent of respondents invest in domestic equities, 24 per cent invest in cryptoassets, and only 19 per cent invest in foreign equities. 

eToro Australian market analyst, Josh Gilbert, comments: “It has been a difficult start to 2022 for investors, after two years of strong market returns. Australian retail investors recognise the significance of diversification with volatility increasing this year, but they are not allowing emotions to rule their investment decisions by panic selling. They have a long-term approach to markets, and seek to continuously add to their investments through strategies like dollar cost averaging. 

“Emotion is a big part of investing, and it can be easy to get caught up in news and media headlines when markets enter correction territory. However, it is evident in the data that Australian retail investors are doing their research, maintaining a cool head, and are confident in their investment choices,” concludes Gilbert.

Other global findings include:

  • Enthusiasm around cryptoassets remained strong this quarter. 39 per cent of respondents said bitcoin presents the best investment buying opportunity, up from 36 per cent last quarter. This was followed by Ether (19 per cent), Litecoin (11 per cent), Dogecoin (10 per cent), Solana (7 per cent), Shiba Inu (7 per cent), Cardano (7 per cent), XRP (6 per cent), Dash (6 per cent) and Polkadot (5 per cent). 
    • This enthusiasm is spurred on by the belief it is a transformative asset class (28 per cent), can provide strong returns (27 per cent), store of value (23 per cent) and a hedge against inflation (17 per cent).
  • The US S&P 500 was the index seen as most likely to rally in the next 12 months (25 per cent), followed by the Chinese Shanghai Stock Exchange (21 per cent), Japanese Nikkei 225 (19 per cent), FTSE100 (18 per cent) and the European Euronext (17 per cent).
  • 40 per cent believe precious metals are the commodity which presents the best investment buying opportunity, followed by oil (34 per cent) and agricultural products (31 per cent).
  • Energy has risen to be the sector 35 per cent of respondents feel presents the best investment buying opportunity over the next 3 months. This is followed by technology (30 per cent) and healthcare (24 per cent). Last quarter, 37 per cent of respondents considered technology as the primary investment opportunity, followed by healthcare (34 per cent) and energy (26 per cent).

Other Australian findings include:

  • Young Aussies take their investments into their own hands from the get-go, with 72 per cent of 18-34 year olds managing their investment via an online investment platform, compared with only 16 per cent opting for a professional advisor, and 5 per cent preferring a robo advisor. 
  • 31 per cent of respondents believe checking in on their investments weekly is the sweet spot.
  • 44 per cent of Aussie investors understand the importance of diversifying the assets in their portfolios to protect against risk.
  • 44 per cent of respondents aged 45-54 invest primarily in crypto, as they believe it is a transformative asset class that will change the world. 64 per cent of 55+ confirm up to 10 per cent of their portfolios are now made up of crypto.
  • 56 per cent of respondents expect to invest the same amount over the next 12 months.