Dean Mitchell
- Boomer retail investors are likely behind the weekly rise to $1.2 billion in US securities purchases, says Vanda Research.
- "Unusually large inflows" into sovereign bond and credit ETFs suggest buying by older and more financially conservative investors.
- Stocks favored by younger retail investors such as GameStop and AMC dropped out of the top of Vanda's weekly leaderboard.
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Retail investors are pouring money back into equities and other financial markets, with one data firm saying their faster-than-expected return to weekly purchases appears to be led by buying among Boomers.
There was a rise to $1.2 billion in average daily purchases of US securities this week, meeting the average for the last 12 months, Vanda Research said Wednesday. The company's VandaTrack data-analysis arm monitors retail investing activity in 9,000 individual stocks and ETFs in the US.
The firm about two weeks ago observed that retail investors had gone into a "hibernation" period after suffering heavy losses in February and underperforming the S&P 500.
Vanda said Wednesday that data suggest wealthier people from the Boomer generation may have been the driving force by this week's climb in purchases, resulting in a "sudden comeback" in activity among retail investors.
"Most of the stocks that made it to the top of our leaderboard this week are high-quality blue chips, while more speculative stocks like GME or AMC have dropped out," wrote Giacomo Pierantoni, a research analyst at Vanda Research, referencing GameStop and AMC Entertainment. The video game retailer and the movie theaters operator this year have exploded in popularity, particularly among younger retail investors.
The increase in blue-chips buying points to behavior by older and more financially conservative investors who are "a lot more wealthy than millennials," said Vanda, which noted that the average age of investors in platforms like Schwab or TD Ameritrade is close to 50.
Meanwhile, "unusually large inflows into sovereign bond and credit ETFs," added to Vanda's view that Boomers were leading the retail activity.
"While most Robinhooders tend to stay away from 'boring' fixed-income products, Boomers, who are closer to retirement, often prefer them to equities," said Pierantoni, referring to the Robinhood trading app. He also pointed to monthly data from clients at Charles Schwab that showed inflows into bond ETFs and mutual funds have been twice as large as those into equities.
More than $416 million last week was pushed into the 30 largest fixed-income ETFs traded in the US, the largest amount on record, said Vanda. The iShares IBoxx $ Investment Grade Corporate Bond ETF "was the most important contributor" with $128 million purchases, Vanda said.