The UK has fallen to be the fourth most popular investment location for UK-based retail investors, according to analysis from Charles Schwab.

Its research, which was conducted in January 2025, found that the US was the most popular investment destination for UK retail investors, with 72 per cent believing it was a good market to invest in, up by 6 percentage points year-on-year.

However, the analysis was conducted prior to President Trump’s recent tariff announcements, which may have impacted sentiment.

Less than two-thirds (63 per cent) considered the UK as a good investment option, down by 3 percentage points year-on-year.

The UK now ranks as the fourth most attractive market to invest in, after Europe (69 per cent) and Japan (68 per cent).

Since Charles Schwab’s Investment Forces survey was introduced six years ago, interest in US investment has risen by 20 percentage points.

Appetite to invest in the US was driven by investors’ belief it would produce the most attractive returns (43 per cent) and offer long-term value (40 per cent).

Older generations were found to be losing their home bias and becoming more bearish on the outlook for the UK.

While 73 per cent of Millennials and Gen Z favoured the UK as an investment destination, only 55 per cent of Baby Boomers and Gen Xers felt the same, a 9 percentage point fall year-on-year.

Negative sentiment amongst older retail investors was driven by apparent cynicism towards the political landscape of the UK, with only 29 per cent feeling UK-based investments were now more attractive after the general election compared to 72 per cent of Gen Z investors.

Changes in policy were also impacting investor sentiment towards the UK, with 61 per cent of all investors saying that they were less inclined to invest in the UK market following recent changes to capital gains tax.

Appetite to invest in overseas markets was higher amongst younger investors (78 per cent) than older generations (54 per cent).

Gen Z and Millennial investors are 19 percentage points more likely to invest in Europe, 18 percentage points more likely to invest in China, 12 percentage points more likely to invest in the US, 11 percentage points more likely to invest in frontier markets, 8 percentage points more likely to invest in emerging markets, and 5 percentage points more likely to invest in Japan, in comparison to their older counterparts.

Nearly six in 10 (58 per cent) retail investors felt China was now a good market to invest in, up 8 percentage points year-on-year, with 48 per cent believing Chinese equities would deliver strong returns and 39 per cent expecting them to deliver long-term value.

“Despite recent market volatility in the US, UK investors continue to look beyond their home market, with the US emerging as the preferred destination for delivering long-term returns and value,” stated Charles Schwab UK managing director, Richard Flynn.

“Our latest research shows a significant shift in sentiment, particularly among older investors, who are becoming more sceptical about the UK’s investment outlook.

“While short-term fluctuations may persist, nearly three-quarters of retail investors still view the US as a strong market to invest in, reinforcing confidence in its potential to generate attractive opportunities over the long run.”

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