Fast-growing Fintech Plum is today releasing its latest analysis of behaviour in its investment community, showing the response of millennial retail investors to the UK COVID-19 lockdown in November/December 2020. Investments have continued to boom during the last quarter of 2020, with stability and long-term growth coming into focus.

Plum is a smart app for saving and investing that has more than 1m customers in the UK. Over the course of 2020, the company has seen its investor base grow by more than 200%, a boom in investing that has been attributed to a drop in spending and emphasis on long-term saving by millennials during the COVID-19 pandemic*.

Analysis published in September showed that in the first lockdown of the pandemic (March–June), there was a marked increase in allocation for ‘The Medic’ (healthcare fund) in March/April followed by an increase in allocation for ‘Tech Giants’ (tech fund). This indicated that in the first wave of the investing boom, investors were adapting to the crisis then, as the situation settled, they started investing in technology, an area that they know well.

However, the later part of 2020 tells a different story. In keeping with the risk rotation in the wider market from momentum stocks to value stocks as the world responded to positive news about the COVID-19 vaccine, Plum customers also adjusted their investment approach from November onwards.

During the second lockdown, the allocation in ‘European Essentials’ (European equities) more than doubled, becoming one of the most popular funds among new Plum customers. This is compared to the first lockdown in March, where allocation of new investors in European equities was low, perhaps as the region was particularly badly affected in the early days of the pandemic.

Alongside the change in allocation for the European fund, Plum’s ‘Clean and Green’ fund saw an increase in allocation. New investor allocation rose from 5.5% to 8.9% for ‘Clean and Green’ in November/December when compared to March/April. This would signal that new investors are considering the long-term impact of their investment and have a higher interest in social responsibility. Meanwhile, ‘Tech Giants’ has had its allocation reduced slightly, an expected cool-off after massive popularity in the first half of 2020.

Plum has also observed a general reduction in bond exposure among new customers, as more new customers choose the ‘Balanced Bundle’ (a mix of 60% shares and 40% bonds) over ‘Slow and Steady’ (20% shares and 80% bonds). The ‘Balanced Bundle’ in November/December accounted for nearly 10% of new investors’ allocation, up from 6.7% during the first lockdown. However, ‘Growth Stack’ (80% shares and 20% bonds) also dropped by nearly 4%, suggesting that new customers are looking for balance in their approach to risk during this second lockdown.

Furthermore, Plum customers are now investing more on average, with the average amount invested during November/December being 50% more than the average amount in March/April. This is attributed equally to the higher disposable income by customers due to the lockdown, and the desire among people to grow their money through their trust in Plum’s platform**. The latter allowed Plum to attract younger users with the average age of new users reducing to 31 years from 33.

Victor Trokoudes, CEO & co-founder of Plum, comments: “The investment boom is continuing at pace. We’re seeing younger customers starting to use our innovative platform and they’re investing more on average. But their behaviour shows us that we’re in a very different landscape now from the early days of the pandemic. It looks like our new customers are increasingly focused on stability and are investing for the long-term. They’re making sensible choices with their fund allocation now that the end of the pandemic may be in sight. We’ll be launching new ESG funds and investment options later this year to keep this momentum up as more people choose to trust Plum with their savings.”