On 19th September, the S&P 500 notched its 39th record high in 2024. 

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While markets have been choppier of late, Wall Street kept defying expectations and delivering above-average stock market growth, especially compared to its peers across the Atlantic. 

In fact, Figure 1 below shows that, if you invested €10,000 in the American S&P 500 30 years ago, today you would have almost triple the amount of capital than if you invested in the STOXX Europe 600 index. 

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This represents an 11.1% average annualised return for the S&P 500 over the past 20 years versus 6.9% for the STOXX Europe 600.

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A culture of stock ownership

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Besides the outperformance of the US stock market over its peers in the developed world, there is a culture of stock ownership in the US that does not seem to exist here in Europe. 

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For example, U.S. households now hold an average of 42% of their total financial assets in stocks (Figure 2). 

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On the back of this investing culture and the success of the stock market, American private pension plans (loosely known as “401k’s”) worth at least $1 million have grown by 31% from the previous year.

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A deeper look into the figures shows that the most affluent 10% percentile of US households owned more than half of their wealth in equities, funds and private pension plans (Figure 3).

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The proportions decline the less affluent the household, with the 50-90% percentile owning almost 40% of their wealth in these assets and the bottom 50% holding around 17%.

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But the point remains. The average American investor has been indoctrinated to invest in American stocks. 

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This has arguably created a virtuous cycle of investment and growth in the US stock market over many years, which has fuelled further investment and growth in corporate America. 

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How does Malta compare?

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A recent report by the Central Bank of Malta sheds light on the composition of Maltese residents’ net wealth (Figures 4 to 6).

The results make for sobering reading:

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• Housing wealth is by far the dominant asset class across all groups: 71.2% of total wealth for households in the bottom half, down to 50.4% for the top 10%. 

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• All cross-sections of society own negligible proportions of their net wealth in investment funds (the barely visible light blue bar).

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• Households own even fewer listed shares (the light yellow bar).

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• Moreover, bank deposits account for over 20% of the assets of households in the bottom half of the wealth distribution, and around 14% of total assets of the top decile.