- Over half (56.7%) of retail investors say they are considering investing in UK shares in 2026, new research from AJ Bell reveals*
- The government has recently doubled down on its efforts to foster a retail investing revolution in the UK by pledging to cut the Cash ISA allowance to £12,000 from April 2027
- However, these plans will introduce significant complexity to the ISA system and harden the border that exists between short-term cash saving and long-term investing
- Global and US shares were also popular, with 51.9% and 34.5% of investors considering investing in those regions respectively
- Bonds (23.8%), money market funds (22.7%) and multi-asset funds (24.9%) also look set to play a prominent role in the portfolios of retail investors next year
Dan Coatsworth, head of markets at AJ Bell, comments:
“UK investors have a home bias. This has been irrefutably evident time and again in research on the retail investor market, and therefore it is unsurprising that over half of AJ Bell customers say they are considering investing in UK shares in 2026.
“You would need to have been living under a rock not to at least have caught wind of the government’s efforts to boost investing in the UK. Rachel Reeves has been banging the drum for economic growth since before Labour came to power in July last year, with an emphasis on savers moving from cash to investing a key pillar of that strategy. However, the government’s approach has often been muddled at best.
“While the government’s aims are absolutely the right ones, as savers could stand to benefit from investing in the long term even with a modest return on their investments, it has opted to pursue them by introducing further complexity into the retail investing space. The chancellor’s flagship policy of reducing the Cash ISA allowance to £12,000 for under 65s from April 2027 is unlikely to push more savers towards investing. Instead, it is far more likely to act as another barrier to the nation’s savers finally dipping their toes into investing.
“These results also demonstrate that investors already have a significant natural home bias. The government should therefore focus on simplifying the existing retail investing landscape, starting with the merging of Cash and Stocks and Shares ISAs, to remove the clear barriers that prevent many from feeling confident enough to invest. Not only would that likely result in more money ultimately funnelling into the UK, but it would also bring about exactly the retail investing revolution so strongly desired without uprooting the current ISA landscape.”
Source: AJ Bell. *Based on an online survey of 1,726 AJ Bell customers carried out between 8 and 12 December 2025.
Why are investors looking at the UK?
“The UK’s FTSE 100 is on track to achieve its best year on record since the global financial crisis in 2009, beating the S&P 500 and Nasdaq year to date with a 22.2% total return**.
“This performance has demonstrated to investors that the UK stock market still has a lot to offer, despite accusations of being stuffed with old economy companies. It has a wealth of stocks that offer steady earnings growth, generous dividends and plenty of jam today. Amid talk of a potential AI bubble, the UK has the antidote to the volatile tech space.
“Sectors like insurance, utilities and consumer goods enjoy predictable earnings and they can help to take the drama out of an investment portfolio. That’s a welcome quality in an uncertain world.
“With so much talk around whether US tech stocks are spending too much money on AI and when they might see a financial return, it’s only natural for UK investors to seek solace in other places, and in brands they know and trust. The UK stock market is full of companies that provide everyday goods and services, meaning the public live and breathe these names. That familiarity is important when it comes to investing.
“UK share valuations also remain attractive versus the US despite a re-rating in the FTSE 100 since late 2023 where it has gone from 10 times forward earnings to nearly 13 times. In comparison, the S&P 500 trades on 22 times earnings. That valuation gap is a key reason why overseas investors are showing more interest in the UK and it’s also why we continue to see plenty of takeover activity involving UK stocks.”
**Source: ShareScope. Total return 1 January 2025 to market close on Friday 12 December 2025. FTSE 100 +22.2%, Nasdaq Composite +20.1%, S&P 500 +17.5%.
Other areas investors are considering in 2026
“US shares have been a great place to make money for more than a decade but 2025 was the year when sentiment shifted. Rich valuations, a president with divisive policies, a high national debt and large exposure to a sector surrounded by bubble talk have led to many investors seeking greater diversification.
“For some, that means adding more exposure in places like the UK and the rest of Europe, but it doesn’t mean avoiding the US completely. There is still some appetite for US shares, perhaps because the country’s stock market offers more rapid earnings growth than many other locations globally.
“We’re also seeing higher interest for investments outside of the equity space. Interest rates have been trending lower on cash savings held with banks and building societies, encouraging more people to switch back into investments in search of higher returns. Not everyone wants to put all their money in higher risk investments, hence we’ve seen lower risk investments like bonds and money market funds grow in popularity and that trend looks to be gathering momentum as we move into 2026.
“Multi-asset funds have struck a chord with members of the public looking to spread their risks across different assets through a single investment. Multi-asset funds are the investing equivalent of a bento box – a single entity split into separate compartments, each offering different flavours of investments. An investor can feast on a menu of shares, bonds and more through one fund, and leave asset allocation decisions to the fund provider rather than sweat over it themselves.”
