Dec 23 (Reuters) – Retail inflows into U.S. stocks are set to hit a record in 2025, as individual investors become a major force behind a rally that is likely to extend into the next year on hopes of interest rate cuts, analysts said.
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Retail trading, meanwhile, accounted for 20–25% of total activity this year, touching a record high of about 35% in April, according to separate trading data from J.P.Morgan.
“Retail investors are here to stay, especially for 2026. They made money this year, they like to trade stocks, they have the applications to do so. We will continue to see them being a good presence,” said Steven DeSanctis, small- and mid-cap strategist at Jefferies.
“The two most active stocks on our platform are typically Nvidia and Tesla. Those are just two examples of individual investors seizing the narrative and in many cases forcing institutional investors to play along,” said Steve Sosnick, chief strategist at Interactive Brokers.
Quantum computing firms, uranium miners, metal miners and rare earth companies also saw substantial retail interest, as investors became more “thematic” in their approach.
RETAIL TRADERS INCREASINGLY PREFER ETFS
A key feature of retail trading in 2025 was the increasing preference for exchange-traded funds (ETFs) tracking equity indexes, cryptocurrencies and commodities, according to executives at major trading platforms.
“Investors continue to be attracted to the ETF technology. It trades throughout the day – it’s tax efficient, it’s transparent,” said Bryon Lake, global co-head of Third-Party Wealth at Goldman Sachs Asset Management.
Direxion’s Daily Semiconductor 3X Bull and 3X Bear ranked among the top five ETFs by dollar volume on eToro, said Bret Kenwell, U.S. investment analyst with the trading platform.
“Retail has been a little bit more in tune to the market dynamics this year,” he added.
POTENTIAL INTEREST RATE CUTS SEEN AS KEY CATALYSTS
Potential rate cuts by the Fed are expected to continue to boost markets next year, keeping up the retail momentum in 2026, according to analysts and brokerages.
“We’re in a kind of golden age of retail investing with better access to knowledge, to the markets themselves and advanced trading platforms,” said David Russell, global head of market strategy at TradeStation.
Still, with doubts continuing to linger around the AI names that have dominated the market this year, analysts said they did not expect the coming year to top 2025’s record as investors may consider broadening their portfolios.
Financials, communications, discretionary, energy, miners and gold mining ETFs could do well, eToro’s Kenwell said.
“But ultimately, retail loves tech so that is an area they will continue to come back to in 2026, particularly if we do see any sort of volatility.”
Reporting by Purvi Agarwal and Twesha Dikshit in Bengaluru; editing by Michelle Price and Anil D’Silva
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