Lack of confidence in US equities brings investors back home

Geopolitical tensions and US trade policy uncertainty have continued to dampen investor sentiment, with many shifting their attention to Australian equities, new research found.

According to Investment Trends' 2025 First Half Australia Online Investing Report, although there remains a positive view on US equities, confidence has "deteriorated" amid growing uncertainty.

In seeking stability, investors are turning to local fundamentals. Australian equities "hold the strongest net intention to buy, more than double that of US shares" in the first half of 2025, the report states.

Investment Trends senior analyst Yiğit Günhan said there is a "recalibration" in how investors approach global markets, noting that investors are becoming more selective as domestic equities stand out as the comparatively more stable option.

The sentiment comes amid a resurgence of returning investors despite ongoing volatility.

The number of active online investors were up 2% compared to the previous half, from 1.33 million in November 2024 to 1.36 million in May 2025, largely driven by those seeking to "buy the dip".

New investor participation has, however, slowed to a post-COVID low of 52,000, accounting for 4% of the active base.

"We're seeing a more conviction-driven online investor base take shape," Günhan said.

"Reactivations suggest that dormant investors are returning with purpose, while the slowdown in new entrants signals an opportunity, and responsibility, for platforms to provide clearer guidance and support in a more uncertain environment."

Additionally, the report found that over one in eight online investors hold an investment account on behalf of their children - and up to 15% are now using AI tools for investing.

"Whether investors are opening accounts for their children or exploring AI tools, they're looking for platforms that do more than execute trades," Günhan continued.

"They're looking for platforms that can support education, embed good habits early, and evolve with the next generation of investors. AI tools will play a key role, but only if they're transparent, trusted, and built for learning."