- Long-term wealth creation is the top priority
- Profit development and the business model are the most important buying criteria
Baden-Baden, 14. December 2023: GRENKE AG, the global financing partner for small and medium-sized enterprises, has analysed the motives and decision criteria of retail investors when buying shares in a large-scale study. The study was conducted together with the German investor association Schutzgemeinschaft der Kapitalanleger e.V. (SdK) and the Baden-Wuerttemberg Cooperative State University (DHBW) in Karlsruhe. On the question of investment goals, the most important finding was that long-term wealth creation is of high to very high importance for over 75 percent of the retail investors surveyed. Protection against inflation was also an important investment objective – at least currently – for over half of those surveyed. Moreover, instead of investing in just a few companies, retail investors prefer to spread their investment over a large number of companies.
According to the study, which was conducted by Matthias Jenkel as the thesis of his dual study programme at GRENKE AG with over 900 retail investors, the two most important decision criteria for retail investors when buying shares are the company’s profit performance and a transparent and understandable business model. The company’s resilience and share price performance were nearly tied and followed in third and fourth place. The price/earnings ratio (P/E ratio) came fifth in the study. According to the study, environmental and social factors are currently less important for retail investors.
The study surveyed retail investors in Germany, who are becoming an increasingly important investor group. According to the German capital markets association Deutsches Aktieninstitut (DAI), the number of people in Germany owning shares reached a new all-time high of 12.9 million in 2022. For GRENKE AG alone, the number of retail investors doubled in just one year (2020) from around 10,000 to over 20,000. This study now provides some concrete starting points on how to address the information needs of retail investors even more accurately and comprehensively.
Anke Linnartz, Vice President Investor Relations at GRENKE AG: “Most importantly, on the basis of the study, we reduced the complexity of the presentation of our business model and, for the first time, offered events for retail investors with our CEO, Dr Sebastian Hirsch. These initiatives have been well received. Our aim is to present information transparently, including information on ecological and social factors, which will continue to gain in importance.”
Paul Petzelberger, member of the SdK Management Board: “The investment factors identified in the academic study provide a deeper understanding of the investment decision-making of retail investors. Retail investors invest their money with foresight for the long-term and have an anti-cyclical effect on share prices. Listed companies are therefore well advised to focus more intently on retail investors as a growing investor group to be able to win them over as long-term investors.”
Prof Dr Frank Borowicz from the Faculty of Economics at DHBW Karlsruhe, who supervised the bachelor thesis study project: “For many years, retail investors have been overshadowed by institutional investors. The study shows that the importance of topics has shifted. Now retail investors are very interested in the company’s business model and crisis resilience, which is a new phenomenon. Ultimately, they want to understand whether the business model will endure in the transforming economy. Environmental and social criteria, although much discussed, still play a subordinate role in retail investors’ investment decisions.”
Currently 26 students are completing their dual study programmes at GRENKE AG. The renowned business magazine “Capital”, in its recent annual survey, once again awarded the financing specialist the highest rating of five stars in the two categories “Training” and “Dual study programme”.
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