Sixty-one percent of retail investors in E-Trade Financial’s second-quarter tracking poll, released Friday, were bullish about the current market, up significantly from 45% in the first quarter.
Fifty-nine percent expected the market to end the quarter up by 5% or more.
E-Trade uses titles of popular movies to gauge investors’ views toward the market. In the new survey, Easy Rider and Singin’ in the Rain increased significantly. However, Dazed and Confused remained the top choice, a position it has held since last year’s third quarter.
“Recent strong market performance at home has boosted investor optimism, but global instability — and its effects on our domestic economy — continues to weigh on investors’ minds,” Mike Loewengart, vice president of investment strategy at E-Trade Financial, said in a statement.
“With many factors at play, including global central bank policies, volatile energy prices and corporate earnings season, investors are wise to remain focused on long-term goals, even while considering potential opportunities.”
E-Trade in early April polled an online U.S. sample of 907 self-directed active investors who manage at least $10,000 in an online brokerage account.
Eighty-four percent of investors surveyed thought the U.S. economy was in fair or better shape. But their positive market views notwithstanding, only 41% considered the economy strong enough for the Federal Reserve to raise interest rates this quarter.
As rates rise, 55% of investors said they would tweak their portfolios, while 43% would make no changes.
About half of investors said market volatility was the main risk they were managing with regard to their portfolios. For a third of investors, political instability and recession were the chief concerns.
Loewengart said investors in the second quarter continued to favor equities, whose performance rebounded during the last quarter. Retail investor interest in U.S. companies rose across the board:
- Large-cap: 46%, up from 42%
- Mid-cap: 43%, up from 35%
- Small-cap: 34%, up from 28%
The Fed’s recent dovishness has had a positive effect on bond performance, and data suggest retail investors are taking note, according to Loewengart. Investor appetite for bonds ticked up to 37% from 31% last quarter.
He said the energy sector’s positive run in the first quarter caused retail investor interest to shoot up 10 percentage points to 48%. It now ranks third as the industry offering the most opportunity.
The health care industry still offers the best opportunity in the second quarter, according to 56% of investors, down from 60% in the first quarter.
Information technology follows, favored by 51% of investors, down from 53%.
Financials, consumer staples and telecommunication services trail way behind.
— Check out Bears Growl in New E-Trade Investor Poll on ThinkAdvisor.