Retail investors enjoyed another banner year by clinging to proven large-cap technology names that were raking in big profits and promising breakthroughs in artificial intelligence.
Vanda's research it is estimated that the year will end with approximately $265 billion in net new inflows into US markets from self-directed retail investors. While that's $25 billion less than the previous three-year average, based on Vanda Research data, it's still within the post-COVID-19 range — indicating a healthy appetite for the average investor to engage with markets.
The six corporate tickers with the biggest retail investor inflows were a who's who of technology momentum trading: AMD (AMD), Nvidia (NVDA), apple (AAPL), Palantir (PLTR), Tesla (TSLA), and Amazon (AMZN). These five names pulled in $67.7 billion in total retail inflows this year. Nvidia overtook Tesla as the most popular stock among retail investors, at least according to inflows.
Nvidia has attracted $29.8 billion in retail net inflows this year, according to Vanda Research findings, up from $11.4 billion last year. Tesla's retail inflows fell to $14.7 billion from $48 billion in 2023.
Tesla still edged out Nvidia as the top holding in retail investor portfolios, however – representing an average portfolio weighting of 10.58% compared to 10.33% for Nvidia.
The other four top tickers were more index-based trades leveraged to popular themes such as AI: Shares Direxion Daily Semiconductor Bull 3X (SOXL), Invesco QQQ Trust (QQQ), ProShares UltraPro QQQ (TQQQ), and SPDR S&P 500 (Spies).
“2024 was an exciting year for markets,” said Vanda Research senior vice president Marco Iachini. “For the average retail investor, it was another great year of portfolio performance. Loyalty to tech names paid dividends.”
Indeed, that technological loyalty paid off.
Vanda Research estimates that the average retail portfolio is up 40.74% this year, the second-highest performance since 2014. Only 2023's performance of 41.94% was better over this 10-year period.
On a flow-adjusted basis, Vanda Research noted that this would mark the second time retail investors beat the S&P 500 (^ GSPC) in back-to-back calendar years and the first time since 2014 that the non-institutional crowd beat the Nasdaq Composite (^IXIC).
Whether the feel-good times for retail investors will continue in 2025 is anyone's guess.
On the positive side, the incoming Trump administration has promised business-friendly policies such as cut government spending through the Department of Government Efficiency (DOGE) headed by Elon Musk and extending tax cuts.
