Private investors invest a record $1.5 billion in the stock market every day

Retail investors have been buying up stocks at an unprecedented pace as US stock markets posted stronger gains earlier in the year.

Last month, retail investors invested an average of $1.51 billion in U.S. stocks each day, the highest amount on record, according to data from research firm VandaTrack released Thursday.

“With recent surveys showing that the institutional investing community is broadly declining towards equities, it would be unwise to underestimate the importance of the retail cohort,” strategists at VandaTrack said in a statement. “This aligns with retail sales and employment data for January, suggesting consumers retain impressive spending power.”

Tesla (TSLA) remained the favorite in this group, with retail flows into the stock totaling $9.7 billion year-to-date.

These allocations come during a comeback rally for the electric vehicle giant following the completion of its worst year since records began in 2022. Tesla shares are up 74% in 2023 through the close on Wednesday.

The SPDR S&P 500 ETF Trust (SPY), an ETF that tracks the benchmark S&P 500, was the second most popular buy by retail investors this year, with total retail flows in 2023 of $3.6 billion. The index is year-on-year up 8.2% due to Wednesday.

Amazon (AMZN), Apple (AAPL), and Nvidia (NVDA) rounded out the top five, receiving $1.8 billion, $1.7 billion, and $1.4 billion in inflows, respectively, this year -Dollar. These names are up 20%, 19.5%, and 55.8%, respectively, this year.

More speculative, run-down names were also popular buys, with investors again circling baskets of shares favored by ARK Invest’s Cathie Wood.

Wood’s flagship ARK Innovation (ARKK) ETF, a trailblazer for high-flying tech stocks, saw a slight increase in inflows this year but ranked 27th on a list of biggest buys by retail investors, raising $169 million for the fund .

However, retail investors have grabbed key underlying names from ARK’s family of exchange-traded funds — Coinbase (COIN), Block (SQ), Roku (ROKU), for example — faster than the company itself, a phenomenon that began early in the COVID-19 pandemic what was observed was a pandemic.

The story goes on

“In 2020-2021, it was common for retail investors to buy ARK ETFs while accumulating some of their more hyped underlying assets,” the team at VandaTrack said. “While we don’t expect retail speculation to reach this level, it is noteworthy that retail investors are far outpacing Cathie Wood and co. in terms of buying some of these names.”

ARK Innovation is up 38.3% through Wednesday.

“Rising retail investor inflows underpin the outperformance of their favorite stocks,” VandaTrack researchers said, adding that retail investor inflows were responsible for an $18.5 billion capital injection into these names in 2023.

“Should the positive momentum in the broader stock market continue, it could push retail investors towards more speculative names which, given their smaller market caps, are more vulnerable to such flows.”

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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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