Retail investors have emerged as the primary force behind the equity market’s latest surge to record highs, outpacing institutional flows and pushing benchmarks into fresh territory.
Since early April—when markets were rattled by tariff announcements from former President Donald Trump—retail traders have been aggressively buying the dip. Barclays estimates they’ve funneled roughly $50 billion into global equities over the past month alone, fueling a powerful rally that has sent the S&P 500 up 26% from its April 8 low.
While institutions have taken a more cautious stance, individual investors have become the dominant driver of upward momentum. According to Barclays, the magnitude and pace of the recent rally suggest it’s being powered largely by retail rather than professional money. JPMorgan data backs that up, reporting retail investors poured $270 billion into equities during the first half of the year—a figure that dwarfs the activity from hedge funds and traditional asset managers.
Institutional flows remain tepid by comparison. JPMorgan notes that hedge fund “re-risking” has been modest, and long exposures in U.S. equities are still below historical medians. That positioning suggests institutions have yet to fully embrace the rally.
In a note to clients, JPMorgan called the retail bid a key market engine, projecting an additional $360 billion in retail stock purchases through the end of 2025. If that plays out, the bank expects it could add another 5% to 10% upside for the S&P 500 from here.
Vanda Research offered a similar read, pegging cumulative retail net inflows into stocks and ETFs at $155.3 billion for the first half of the year—the highest six-month tally in at least a decade. According to Vanda strategist Marco Iachini, a combination of healthy portfolios, continued strength in the labor market, and April’s successful buy-the-dip campaign has kept retail sentiment buoyant.
“The portfolio recovery in Q2 appears to have emboldened retail traders,” Iachini wrote. “With employment trends still broadly stable, individual investors remain a steady source of equity demand well into 2025.”
An eToro survey conducted in May helps explain that behavior. Sixty-one percent of retail investors identify as dip-buyers, with most entering the market after an 18% or greater drawdown. Among younger cohorts, the response to volatility is even more pronounced: 91% of Gen Z and 87% of millennials say they actively change their strategy when market turbulence increases.
For advisors, the retail momentum presents a double-edged sword. On one hand, it adds a powerful tailwind to equity markets, supporting valuations and sentiment. On the other, it underscores a growing disconnect between retail exuberance and institutional caution—raising questions about how sustainable the rally truly is, especially if macro risks re-emerge.
It’s also a reminder that clients—especially younger ones—are becoming increasingly comfortable trading on their own, often in reaction to short-term volatility. That behavioral shift is something RIAs will want to monitor closely as they position portfolios and guide conversations around long-term strategy versus tactical opportunism.
While the retail bid has clearly become a central pillar of the market narrative, it remains to be seen how long it can carry the rally without broader institutional confirmation. For now, the “little guys” are in control—but wealth managers will need to weigh whether that’s a bullish signal or a reason to de-risk.
