U.S. retail trading has increased significantly ever since the advent of app-based trading democratized access to stock markets. We saw another jump right around the start of Covid, just as most trading became commission-free and stimulus checks were distributed.\u00a0\u00a0<\/p>\n
Interestingly, despite the \u201cnegative wealth effects\u201d caused by the market sell-off after recent tariff announcements, we may be seeing activity rise again, with retail actually increasing their net buying.\u00a0\u00a0<\/p>\n
Retail love buying ETFs<\/strong><\/h2>\nOne feature we consistently highlight is that retail tends to net-buy exchange-traded funds (ETFs) most days. That\u2019s reflected in this longer time series, too. Going back to 2019, our data suggests retail:<\/p>\n
\n- Buys ETFs every single month (yellow).<\/li>\n
- Wavers between buying and selling of company stocks (blue).<\/li>\n
- Has been increasing their net buying \u2013 for both stocks and ETFs \u2013 in 2025.\u00a0<\/li>\n<\/ul>\n
Chart 1: Net retail trading has consistently, and increasingly, buying ETFs for at least the past six years<\/strong><\/p>\n\n\n\n![\"Net](\"https:\/\/www.nasdaq.com\/sites\/acquia.prod\/files\/2025\/05\/15\/Screenshot%202025-05-15%20at%204.55.55%E2%80%AFPM.png\")
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Retail gross trading is increasing, too<\/strong><\/h2>\nIt seems intuitive that many \u201cnew\u201d retail investors might be scared by the recent tariff-induced sell-off, and the declines in their portfolios.<\/p>\n
The data shows that, instead of backing away from the stock market, retail has actually increased the value of their trading activity \u2013 for both ETFs and company stocks.<\/p>\n
In the most recent data, the value of company stock trading outweighs ETF trading by around three-times.<\/p>\n
Chart 2: Gross retail trading across ETFs and stocks\u00a0<\/strong><\/p>\n\n\n\n![\"Gross](\"https:\/\/www.nasdaq.com\/sites\/acquia.prod\/files\/2025\/05\/15\/Screenshot%202025-05-15%20at%204.57.37%E2%80%AFPM.png\")
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Retail is still a small portion of all market liquidity\u00a0<\/strong><\/h2>\nOf course, as prices have risen over the past few years, and as volatility has increased recently, the whole market has been trading more value.<\/p>\n
Adjusting for that, we see the increase in retail trade has mostly just kept pace with others in the market.<\/p>\n
We also see that the value of retail trading seems surprisingly low (at less than 4% of value traded). Although, we would highlight that retail is likely a much larger part of ADV<\/a> (or shares) traded. Thanks to their higher participation in lower-priced<\/a> stocks, it takes 100-times more shares to invest $1 million in a $2 stock compared to a $200 stock.\u00a0<\/p>\nChart 3: Retail value trade as a percent of all trading<\/strong><\/p>\n\n\n\n![\"Retail](\"https:\/\/www.nasdaq.com\/sites\/acquia.prod\/files\/2025\/05\/15\/Screenshot%202025-05-15%20at%205.00.45%E2%80%AFPM.png\")
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Even though retail love ETFs, their share of that trading is also low<\/strong><\/h2>\nGiven that retail loves to buy ETFs, it\u2019s worth looking at retail trading of ETFs separately.<\/p>\n
However, although the data shows growth (rising from 5.2% to 6.4%), even that new percentage remains relatively low.\u00a0<\/p>\n
Chart 4: Retail trading of ETFs as a percent of all ETF trading is growing (but lower than you might expect)\u00a0<\/strong><\/p>\n\n\n\n![\"Retail](\"https:\/\/www.nasdaq.com\/sites\/acquia.prod\/files\/2025\/05\/15\/Screenshot%202025-05-15%20at%205.02.01%E2%80%AFPM.png\")
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Retail liquidity is getting bigger (but still not as big as it sounds)<\/strong><\/h2>\nRetail liquidity is growing and becoming a more substantial contributor to U.S. markets.\u00a0<\/p>\n
OECD data suggests direct holdings of stocks by U.S. investors are among the highest levels in the world, making retail investors an important source of capital for companies (even if that\u2019s through ETFs).<\/p>\n
Chart 5: U.S. has some of the highest household ownership of stocks in the world<\/strong><\/p>\n\n\n\n![\"U.S.](\"https:\/\/www.nasdaq.com\/sites\/acquia.prod\/files\/2025\/05\/15\/Screenshot%202025-05-15%20at%205.03.41%E2%80%AFPM.png\")
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But the U.S. market is very liquid \u2013 trading over $1.5 trillion (two-sided) every day. And as we\u2019ve shown before, there is a lot of arbitrage<\/a> and market making \u2014 within stocks and across asset classes \u2014 which keeps the U.S. market efficient.<\/p>\n
Chart 1: Net retail trading has consistently, and increasingly, buying ETFs for at least the past six years<\/strong><\/p>\n <\/source><\/source><\/source><\/picture>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n It seems intuitive that many \u201cnew\u201d retail investors might be scared by the recent tariff-induced sell-off, and the declines in their portfolios.<\/p>\n The data shows that, instead of backing away from the stock market, retail has actually increased the value of their trading activity \u2013 for both ETFs and company stocks.<\/p>\n In the most recent data, the value of company stock trading outweighs ETF trading by around three-times.<\/p>\n Chart 2: Gross retail trading across ETFs and stocks\u00a0<\/strong><\/p>\n <\/source><\/source><\/source><\/picture>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n Of course, as prices have risen over the past few years, and as volatility has increased recently, the whole market has been trading more value.<\/p>\n Adjusting for that, we see the increase in retail trade has mostly just kept pace with others in the market.<\/p>\n We also see that the value of retail trading seems surprisingly low (at less than 4% of value traded). Although, we would highlight that retail is likely a much larger part of ADV<\/a> (or shares) traded. Thanks to their higher participation in lower-priced<\/a> stocks, it takes 100-times more shares to invest $1 million in a $2 stock compared to a $200 stock.\u00a0<\/p>\n Chart 3: Retail value trade as a percent of all trading<\/strong><\/p>\n <\/source><\/source><\/source><\/picture>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n Given that retail loves to buy ETFs, it\u2019s worth looking at retail trading of ETFs separately.<\/p>\n However, although the data shows growth (rising from 5.2% to 6.4%), even that new percentage remains relatively low.\u00a0<\/p>\n Chart 4: Retail trading of ETFs as a percent of all ETF trading is growing (but lower than you might expect)\u00a0<\/strong><\/p>\n <\/source><\/source><\/source><\/picture>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n Retail liquidity is growing and becoming a more substantial contributor to U.S. markets.\u00a0<\/p>\n OECD data suggests direct holdings of stocks by U.S. investors are among the highest levels in the world, making retail investors an important source of capital for companies (even if that\u2019s through ETFs).<\/p>\n Chart 5: U.S. has some of the highest household ownership of stocks in the world<\/strong><\/p>\n <\/source><\/source><\/source><\/picture>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n But the U.S. market is very liquid \u2013 trading over $1.5 trillion (two-sided) every day. And as we\u2019ve shown before, there is a lot of arbitrage<\/a> and market making \u2014 within stocks and across asset classes \u2014 which keeps the U.S. market efficient.<\/p>\n<\/p>\nRetail gross trading is increasing, too<\/strong><\/h2>\n
<\/p>\nRetail is still a small portion of all market liquidity\u00a0<\/strong><\/h2>\n
<\/p>\nEven though retail love ETFs, their share of that trading is also low<\/strong><\/h2>\n
<\/p>\nRetail liquidity is getting bigger (but still not as big as it sounds)<\/strong><\/h2>\n
<\/p>\n