Key takeaways

• As global regimes realign, investors must navigate an environment in which traditional assumptions - including those linked to government policy, interest rates and market stability - are becoming less predictable.
• In our 2025 European Investor Sentiment Survey, optimism about long-term goals persists, yet actual behaviour reveals a heightened sense of caution.
• Core investment principles such as staying invested through volatile conditions, maintaining diversification, and actively managing opportunities are foundational disciplines for achieving long-term outcomes.

Investors are operating in a landscape defined by global fragmentation. Inflationary dynamics are elevated, resulting in interest rates that are normalising at higher levels than previously expected. Meanwhile, policy shifts are fracturing decades-long geopolitical alignments, reconfiguring capital flows, regulatory frameworks, and market expectations. The challenges in this environment of structurally elevated uncertainty are both broader and more acute.

In this context, Fidelity International surveyed 5,500 retail investors in Germany, France, Italy, Spain, Switzerland, and the Netherlands to better understand investor concerns and behaviours. Conducted in May and June this year, the 2025 European Investor Sentiment Survey cuts across demographic factors including gender, income levels, working status and family status.

Below are some highlights from the survey. We hope the results can be used to help investors navigate through this regime change by applying key principles for long-term investing.

More are seeing ‘glass half full’

Despite the geopolitical and macroeconomic challenges, 44% of the European investors surveyed remain optimistic about the direction of the market in the next 12 months compared to 22% who are pessimistic (see Figure 1). However, the level of optimism varied among countries, with 52% of the Dutch investors surveyed feeling optimistic but only 34% of those in France expressing the same sentiment.

Furthermore, two-thirds of the respondents are confident their investment portfolio will achieve their long-term goals. Investors in Germany, the Netherlands and Switzerland are particularly so, with about a quarter of the respondents saying they are ‘very confident’ they are on track to achieve long-term goals. Meanwhile, only 8% of the respondents in Italy say they are ‘very confident’ in doing so (see Figure 2).

Reconciling long-term aspirations with short-term volatility

Yet beneath this confidence lies an increasing level of restraint via reduced investment activity and heightened concerns about the risk-return characteristics. For example, more investors say they will invest less in the coming year relative to those who want to invest more (see Figure 3). Among those likely to invest less, the mean amount reduced was estimated at EUR 5,000 (see Figure 4). In Italy and France, about half are planning to reduce investments, compared to just 29% of those in the Netherlands with similar plans.

Conversely, at 35%, a higher percentage of Dutch investors are likely to invest more in the coming year relative to investors in other countries surveyed, with a median increase in investments of EUR 6,500. Similarly, 34% of Swiss investors, who are also more optimistic about the stock market, say they are likely to invest more during the same period, increasing by a median amount of EUR12,500.

Among the respondents likely to invest less in the coming year, market uncertainty, geopolitical concerns and fear of losses are the top three reasons at 37%, 31% and 25%, respectively (see Figure 5). A quarter of the respondents would prefer to keep their money in cash, while about 21% say they lacked the capital to invest during the same period.

As demonstrated in Figure 6, the top four reasons for adding to the investment portfolio include: taking advantage of market opportunities (29%); an increase in disposable income (25%); an increase in income (22%); and a desire to accelerate progress toward longer-term financial goals (22%).

Opportunities amid turbulence

While elevated market uncertainty is uncomfortable because it can lead to unexpected volatility, it is an intrinsic part of investment. Recognising this characteristic and applying the tools to manage it can help investors respond constructively and with clarity. Particularly for those with long-term horizons, the following three principles can help them stay focused amid the turbulence.

First, stay invested. Timing the market is often suboptimal. Dipping in and out of the market can lead to increased trading costs and missed returns during the recovery. Downturns can lead to new opportunities. Furthermore, in periods of elevated inflation or prolonged low yields, portfolios skewed too heavily towards defensive assets may fail to preserve purchasing power or generate the necessary income.

In June, the European Central Bank decided to lower interest rates by 0.25 percentage points to 2%. Over a period of about a year, the ECB has halved its key deposit rate from 4% in what has been one of the most rapid pivots from tightening to easing among central banks. If, as expected, the ECB implements one or two more cuts by the end of the year, this would reinforce the increasing attractiveness of riskier assets in Europe.

For investors, the implications are significant. Particularly in bond markets, falling interest rates translate into rising prices, especially for longer-duration instruments. Investors are incentivised to move further out the risk curve towards higher-yielding strategies.

Second, diversify. In volatile markets, in which asset prices can move erratically and correlations can shift without warning, diversification functions as both a way of spreading risk and acting as portfolio ballast.

Among the European investors surveyed, one of the most notable trends is the persistence of a home bias (see Figure 7). This may reflect a comfortable level of familiarity, perceived security, and other factors including potential tax advantages. Depending on their investment goals, investors also should consider the possibility of being too concentrated in domestic markets, limiting diversification potential and access to higher-yielding opportunities in other regions or asset classes.

Third, market corrections can create attractive opportunities. Often perceived in negative terms, volatility can also be a mechanism to reveal underlying disparities in valuation, liquidity, and investor conviction. This dispersion creates opportunities, and investors with liquidity who take a disciplined approach can benefit.

Among survey respondents, 39% said they saw the best opportunities in stocks and shares in the coming year, with 54% already invest in the asset class (see Figure 8). As expected, due to investors’ home bias, those surveyed saw their domestic markets as the best buy during the same period (see Figure 9).

Navigating unstable markets

As global markets gyrate between optimism and pessimism, our survey reveals a growing tension investors are facing in managing heightened uncertainty in capital markets.

More respondents feel optimistic about the market outlook and confidence in achieving long-term goals. Yet many are also likely to invest less in the coming year, citing developments such as the impact of geopolitics. Even among those who see opportunities ahead and want to invest more during the same period, they are likely to approach with caution, with more sticking closer to home.

Navigating an investment landscape in transition requires developing a clearer understanding of the changing risk-return characteristics of their portfolio. Investors are facing more difficult trade-offs - for example, between capital growth and preservation. It is therefore essential to follow core principles such as staying invested, diversifying the portfolio, and managing new opportunities to meet their required return targets amid the elevated uncertainty.