AJ Bell said in a trading update that 21,023 new customers signed up to the platform in its recent third quarter, the majority of them retail investors trading on their own hunches. Small-time investors deposited £1bn on the platform, helping total assets under management rise past £70bn for the first time.
Elsewhere, trading platform IG Group reported a record year for its business. The company said on Thursday that trading revenue rose 31% to £853.4m last year and active client numbers rose by the same amount. Profits surged 50% to £450m.
"Following a sustained period of strong acquisition, elevated demand and new client retention, IG now services a substantially larger client base," IG chief June Felix said in a statement. "Today, we believe that we are in a better position than ever before."
Shares in AJ Bell rose 2.4%, while IG popped 3%.
Both companies have benefited from an explosion of interest in trading and investment from amateur investors. A combination of boredom and spare cash thanks to government support schemes has encouraged many people to play the stock market during the COVID-19 pandemic.
The trend accelerated this year after retail investors made headlines in January for targeting hedge funds shorting GameStop (GME) in the US. Amateur investors successfully drove out short sellers by driving up the stock price, coordinating their actions on Reddit. The social network's r/WallStreetBets platform has become synonymous with the recent retail trading boom.
Both AJ Bell and IG said they thought the new clients they picked up during the pandemic were here to stay, suggesting the retail trading boom was not likely to turn into a bust. Vanda Track, a research house that follows retail investor flows, said amateur investors bought $2.2bn-worth of stock on Monday of this week – a record high.
"We wouldn’t be surprised to see strong retail purchases going forward but their appetite to buy anything riskier than indexed funds and blue chips seems limited for now," wrote Vanda analysts Ben Onatiba and Giacomo Pierantoni.
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