George Naddaf, Managing Director of eToro (MENA)
The latest UAE Retail Investor Beat report by eToro indicates that retail investors in the UAE are increasingly confident in their local market while diversifying their portfolios with global investments and defensive assets. This survey, which collected insights from 1,000 investors in the UAE, reveals changes in portfolio priorities, an interest in commodities, and the growing influence of AI on trading strategies.
According to George Naddaf, managing director of eToro (MENA), these results underscore the evolution of the retail investment landscape in the Gulf region, where local market optimism is paired with strategic diversification.
Changes in Sector and Asset Preferences
Naddaf noted, “While we are experiencing shifts, some aspects remain constant. Financial services, real estate, and technology continue to be the most favored sectors among investors, similar to a year ago. However, energy has surpassed communications and both staple and discretionary consumer goods, becoming the fourth preferred sector. Meanwhile, cryptocurrencies remain the leading asset class. Interestingly, traditional alternative investments like real estate, which were once the second most popular choice, have been eclipsed by commodities, cash, and local stocks.”
Investor motivations are adapting as well. “The objectives behind investments have slightly evolved. Now, 52% of investors aim for financial independence while 48% are focused on long-term security, a change from 39% and 37% respectively recorded in 2024. This signifies their heightened significance compared to goals such as capital generation for future expenses or outperforming savings accounts,” added Naddaf.
Strategic Balancing of Regional and Global Investments
Diversification is a significant focus for investors. Naddaf pointed out that UAE investors are confidently investing in local markets while also seeking global opportunities. “The recent eToro survey indicates that 85% of investors favor local stocks, with 58% predicting the Middle East will yield the best returns over the next five years. At the same time, they are not neglecting international markets; 50% believe the US will deliver strong long-term returns, followed by China with 35%.”
Investor sentiment has been influenced by trade tensions. Naddaf remarked, “In light of ongoing trade tensions, many investors are centering their portfolios on regional markets perceived as resilient and bolstered by government support (such as in the UAE), while reducing exposure to nations highly impacted by tariffs.”
AI Transforming Investor Behavior
The survey also highlights the emerging impact of AI on investment approaches and decision-making processes. Naddaf stated, “On the market front, investors are directing funds into tech firms that embrace or facilitate AI as part of their growth strategies. Currently, 35% of respondents have investments in technology stocks, while 36% intend to invest in the next three months.”
From a behavioral perspective, AI is democratizing access to sophisticated, institutional-level tools. “We believe AI’s foremost influence on retail investor habits and decisions will be its ability to provide valuable tools traditionally available only to institutional investors. Thus, eToro has launched a set of AI tools allowing vetted Popular Investors to develop customizable applications and dashboards using eToro’s public API, enabling them to innovate similarly to top hedge funds. Additionally, our AI companion, Tori, offers personalized insights and assists users in navigating the platform through conversational interaction, while our AI-driven Alpha Portfolios provide quant-style strategies typically reserved for institutional clients.”
Interest in Equities, ETFs, and Digital Assets
Although investors in the UAE are keen on real estate and traditional assets, they are also exploring a wider range of investment options. Naddaf mentioned, “Equities remain highly popular, with 85% of UAE retail investors holding local stocks — 39% in Abu Dhabi, 28% in Dubai, and 18% in both regions. Among different sectors in the UAE, real estate is the most favored, with 55% choosing this sector.”
Digital assets are gaining traction as well. “Cryptocurrencies are already the most prevalent asset class, with 54% of investors participating. Although the survey did not specifically inquire about ETF holdings, it found that when investing in UAE equities, 30% of investors prefer baskets of stocks such as index funds or ETFs, while 44% opt for a mix of both ETFs and individual stocks. Only 24% favor individual stocks on their own.”
Increased Risk Appetite Compared to Global Peers
A notable finding from the survey is the heightened risk tolerance of UAE investors when compared to global averages. “The new data from the UAE suggests that local investors are more inclined to engage with volatile assets like cryptocurrencies (54% compared to 36% globally) and are less likely to hold cash (45% compared to 68% globally). They are also significantly more likely to engage with derivatives (47% versus 21% globally).”
Optimism in the UAE Economy
This inclination towards risk is underpinned by a strong belief in the local economic landscape. “UAE investors display notable confidence in their economy, with nearly two-thirds identifying as ‘very confident’ and 59% echoing the same sentiment regarding the long-term outlook for local equities.”
This strong confidence is further solidified by the perception that the UAE market offers sufficient diversification. “Our survey shows that 64% of retail investors believe the UAE market itself presents ample diversification opportunities, which likely contributes to their optimism.”
However, Naddaf recognizes the need for a balanced approach. “Concentration brings risk. To mitigate this, many investors are distributing their investments across a variety of assets: cryptocurrencies (54%), commodities like gold and oil (47%), cash (45%), and alternative investments such as real estate and private equity (43%)—all in addition to local equities. Within the UAE, sector diversification is clear, with 50% of retail investors actively investing in financial services, 47% in real estate, and 35% in technology, among other sectors.”
Enhancing Resilience Through Commodities
Commodities are increasingly seen as a vital hedge during turbulent times. “In response to global trade uncertainties, 53% of investors are boosting their exposure to UAE equities, while 51% are increasing their commodity investments. When asked which assets are most resilient in a tumultuous trade climate, gold emerged as the top choice at 49%.”
Naddaf believes this two-pronged strategy enhances the resilience of investors. He concluded, “This way, investors can capitalize on the growth potential of robust local markets while also fortifying their portfolios with defensive assets. In my perspective, this positions UAE retail investors to remain steadfast in the face of global unpredictability.”