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Fidelity’s “Top Traders” Offer Their Secret Investing Recipe
Study Reveals Investing Strategies and Concerns of Fidelity’s Most Successful Trading CustomersBOSTON – Fidelity Investments® today announced results from its inaugural “Top Traders Survey,” which reveals the current strategy and future plans of the company’s most successful trading customers. Top Traders are Fidelity® customers who made at least 36 trades over the past 12 months and whose total portfolio performance during this time was at least 20 percent, putting them among the 1,000 top-performing traders at the firm.
Against a backdrop of worldwide economic instability, sustained high U.S. unemployment and the rapidly widening federal budget deficit, 68 percent of Top Traders identify global economic instability as one of their top three investment concerns for 2013. To combat this, they plan to decrease their allocation to international equity by 10 percent in the six months following the survey1.
Top Traders are seeking investment opportunities elsewhere, such as increasing their allocation to ETFs by 15 percent over the six months – the largest planned increase to any financial product. At the time of the survey, the respondents’ portfolio allocation was 57 percent to equities, 16 percent to cash, 10 percent to bonds, seven percent to options and five percent to ETFs. Additionally, the three market sectors in which they would invest a hypothetical windfall of $100,000 are energy, information technology and utilities.
“We view this survey as an excellent opportunity to look inside the minds of some of our best traders,” said Ram Subramaniam, executive vice president of Fidelity’s retail brokerage business. “These investors are setting the standard for performance using our online brokerage platform and their insight can be immensely valuable to other traders looking to gain an investing edge.”
Five Top Tips from Top Traders:
Shoot for the Stars, Settle for the Moon:
• Most of the Top Traders set reasonable expectations for themselves. Sixty-four percent define investing success as a positive total gain in their portfolio, 31 percent define it in comparative terms to an index, and five percent define success as breaking even.
Take Risk Head-On:
• Sixty-two percent of Top Traders surveyed say they are willing to take on large risks for the prospect of large returns, while only 9 percent say they would be willing to accept lower returns for less risk.
• Sixty-eight percent believe investing is a calculated risk.
Focus on the Big Players:
• Top Traders are primarily bullish about large cap stocks, with mega cap stocks taking second place.
You Are Your Own Best Teacher:
• Fifty-three percent of Top Traders use their own experiences with a product or company to generate new investment ideas.
• Thirty-nine percent of Top Traders who beat the S&P 500® Index’s rate of return as of the survey date attribute their investment success to their own knowledge base and research.
No More Tears:
• Thirty-two percent of Top Traders say other traders are too emotional in making investment decisions, follow what’s trendy or sell too quickly.
• Since the U.S. financial crisis of 2008, 56 percent of top performers say they have remained or have become more of a long-term investor.
Additional Findings about Top Traders:
• Forty-seven percent invest in options and of those, 57 percent say their options investments performed better or significantly better than their other investments.
• Fifty-eight percent will not change their trading frequency in the next 6 months, while 19 percent will trade more.
• Seventy percent are concerned that inflation will increase.
• Nearly half (49 percent) have been trading for more than 20 years.
• Eight in 10 do their own research and make their own investment decisions.
“Our Top Traders Survey offers insights to help other investors navigate the difficult fiscal path ahead of us in this country and elsewhere,” said Jennifer Samalis, senior vice president of Fidelity’s Active Trader Platforms. “There is no knowledge that is not power and whether or not investors choose to utilize these tips, we felt it important to analyze and share this information based on what the best of the best are planning.”
To help customers achieve the best performance with their investments, Fidelity offers a range of no-cost advanced education classes online at Fidelity’s Learning Center and in-person at 179 investor centers around the country, as well as powerful tools such as streaming quotes and news, stock and mutual fund screeners, price alerts and independent, third-party research content. Investors interested in learning more about Fidelity’s trading advantages, including low-cost commissions, can visit Fidelity’s Trading Overview page.
About the Study
The total sample for this study included 407 investors, surveyed from July 25 to September 9, 2012. The list of respondents provided by Fidelity consisted of 78 Top Traders with a 12-month portfolio performance of at least 20 percent, 50 Top Non-Traders, 55 Bottom Traders whose 12-month portfolio performance was less than -10 percent, 32 randomly-selected Traders with 12-month portfolio performance between -70 percent and 30 percent, and 192 randomly-selected Non-Traders. Data was weighted to the proportion of Traders and Non-traders within the Top Performer population. Top and Bottom Traders are defined as the top and bottom 1,000 performing Fidelity client traders, respectively.
About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $3.9 trillion, including managed assets of $1.7 trillion, as of December 31, 2012. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.
1) Survey was conducted from July 25 to September 9, 2012