Retail investing finished strong in 2020 as a heavy news cycle comprised of the U.S. presidential election, COVID-19 vaccine rollouts, notable IPO happenings, and general market movement contributed to new highs for account openings (particularly from digital wallets), asset growth, number of trades, and volume traded in 4Q, according to new data released today by DriveWealth, a leading global brokerage infrastructure platform.
Some of the key 4Q and 2020 findings from DriveWealth’s proprietary data, which monitors investment activity by individual investors from across its network of global partners including Hatch, MoneyLion, Stake, Revolut, and Unifimoney into the U.S. equities market, include:
Quarterly trading volume and asset growth outpaced the markets once again, rising 40% and 59% respectively between 3Q and 4Q, vs. S&P 500 at 12% and NASDAQ at 15%.
Investors aged 60+ traded the largest amounts every quarter and overall in 2020, while the largest percentage growth in account openings was driven by investors under the age of 20.
2020 finished the year strong − total accounts were up 275% over 2019, while funded accounts closed the year up 277%.
One notable trend from DriveWealth’s data is how embedded finance continues to drive more retail investing activity, with over 30% of our orders being placed outside of market hours, proving that many retail investors are not day trading or trying to time the market.
DriveWealth’s partners offer engaging investing experiences, which drives significantly higher trade frequency than investors at traditional retail brokers. The average number of trades per account on the DriveWealth platform was 29 trades in 2020, up 21% from 24 trades in 2019. By comparison, the average amount of trades per funded account in 2019 on TD Ameritrade was 18, while Schwab saw 15.3 trades at ETrade at 10.1, according to company data compiled by Nasdaq.
"2020 was an unprecedented year, but it gave rise to the profile of the retail investor that had a significant impact on the markets," said DriveWealth Founder and CEO Bob Cortright. "Our partners’ customers around the world invested in companies with a global presence such as Amazon, Apple, Microsoft, and Tesla. We here at DriveWealth anticipate such trends will only continue in 2021 and beyond as embedded finance continues to evolve and improves the financial lives of millions around the world through affordable access and engagement."
A pioneer in fractional investing and embedded finance, DriveWealth has built an API-driven, cloud-based brokerage platform that is transforming the investment landscape by democratizing access to U.S. equities for investors domestically as well as abroad. With more than 50 partners in 150 countries around the world, DriveWealth’s mission is to reshape retail investing by enabling banks, global brands, and fintechs to provide investment access and advice to underbanked and underserved customers that was previously only available to the wealthy. For more information, please visit drivewealth.com.
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