Retail investors bought a record $2.2 billion of stocks on Monday, with many seeking shelter in ETFs as the market melted down, data shows
- Retail investors bought $2.2 billion in equities during Monday's rout, according to
Vanda Research. ETFsaccounted for 44% of total retail purchases, higher than the average of 29%.
- The data suggest that retail investors were scared to buy the dip in individual stocks.
Retail investors shoved more than $2 billion into the US
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SPY tracks the S&P 500 and is the largest ETF, with more than $370 billion in assets under management, according to ETF Database. The popular QQQ ETF tracks the Nasdaq-100 index of large-cap growth stocks including Apple, Microsoft and Tesla.The data suggest that retail investors were scared to buy the dip in the stocks that suffered on Monday and decided on the more straightforward avenue of buying indexed products, he said. Reopening stocks -- or those closely tied with the economy mending from the COVID crisis -- were among the worst-performing groups, he said, but the magnitude of retail purchases was 40% lower than in the last sell-off on June 28, at $120 billion compared with $202 billion.
"Institutional investors were dumping the stocks but found little interest from the retail crowd, making the sell-off even more violent," Pierantoni said.Vanda also said it appears that the current pace of retail purchases is sustainable over the medium term. "[Most] retail investors enjoy a stream of income (payroll, dividends, rentals, etc) that allows them to park more money into stocks. Hence, we wouldn't be surprised to see strong retail purchases going forward but their appetite to buy anything riskier than indexed funds and blue chips seem limited for now," he said.
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