Retail investors 10% of transactions in the US market
Retail investors now account for 10% of daily trading on the vast US stock index Russell 3000, US News & World Report reported Wednesday, June 30, citing a note from Morgan Stanley.
The Russell 3000 comprises 3,000 of the largest stocks traded in the United States, which represent a portion 98 percent of all equity securities in the country. The index peaked at 15 percent in September of last year.
The average daily trading volume on the Russell 3000 Index has reached $ 380 billion since the end of last week, with retail investors adding some $ 38 billion a day, the outlet reported, citing data from Refinitiv. For comparison, individual investors represent 5% of the total market value, according to data from Euronext.
“We are finding that retail investors tend to prefer companies in industries that they are likely to be familiar with as consumers, such as consumer discretionary, communications services and technology,” Morgan Stanley said. in a note, by US News.
Morgan Stanley used its own methodologies for the study period from July 2016 to June 2021 and found that stocks with a high volume of individual trades outperformed stocks with a lower number of retail investors.
Stock purchases from individual investors rebounded last year and early 2021 thanks to meme stock trading that included GameStop and AMC, with prices rising more than 1,000%. The situation was unlike anything market professionals had never seen in recent years.
JP Morgan recently moved to acquire its third FinTech OpenInvest, which offers reporting tools for financial advisers. The company also acquired UK robo-advisor Nutmeg.
Some 73% of American Millennials and Gen Z consumers reported communicating with others digitally more than in person. In addition, some 70 percent can envision a life where online shopping is the only way to buy goods.
Betting against individual investors’ stock trades is a decision highlighted as being as difficult as it gets, with Goldman Sachs, Citigroup, Bank of America and Jefferies Financial Group adjusting risk controls.