Britain’s largest retail investment company, Hargreaves Lansdown, has reported a rise in half-year profits as vaccine hopes and the US election result prompted an influx of younger clients looking to invest in stock markets.
The broker said it had attracted £3.2bn worth of new business and another 84,000 clients since June, as the Covid outbreak reinforced the importance of saving as well as investing. Nearly half of all new clients were aged between 30 and 54.
Investor confidence fluctuated throughout 2020, but risk appetite improved in the final three months of the year thanks to “the US election and positive news of the Covid-19 vaccine”, the firm said. It sparked a rush in stock trading volumes, which jumped 123% in the second half of 2020, helping to push pre-tax profits up 10% to £188m.
The broker, which was founded by the billionaire Peter Hargreaves and Stephen Lansdown from a spare bedroom in Bristol in 1981, now serves a record 1.5 million active customers and handles nearly £121bn worth of assets, a 16% increase from a year earlier.
Its chief executive, Chris Hill, said the company had “delivered a period of very strong growth with record new clients and increased market share against the backdrop of the pandemic and the political uncertainty of the US elections and Brexit.
“As our client numbers continue to grow, we are finding that younger people are taking a greater interest in investing for the future, with the average age of our clients continuing to fall. Covid-19 has underpinned the importance of financial resilience,” he said.
Most banks and stock market trading platforms have benefited from Covid restrictions, because customers lucky enough to have kept their jobs or benefited from government support programmes have spent less during lockdown, leaving them more money to put into savings and investments, including shares.
A surge in extra cash has helped propel a trading frenzy on Wall Street in recent weeks. An army of small investors with links to the WallStreetBets forum on Reddit banded together to invest in unloved stocks targeted by hedge funds including GameStop, which surged from $20 to as much as $450 last week.
The Financial Conduct Authority has told UK investors to use “extreme caution” when buying stocks being discussed in online forms. “Volatile markets are unpredictable and mean you can quickly lose money. Losses are unlikely to be covered by the financial services compensation scheme,” it said.