Retail investors turn to ETFs as recession fears knock down meme stocks

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Retail investors are doubling down on Exchange Traded Funds (ETFs) as rising interest rates and volatile markets curb their appetite for risky assets such as meme stocks, SPACs and cryptocurrencies.

Global financial markets have taken a beating as central banks try to combat runaway inflation with aggressive rate hikes, thereby ending years of loose monetary policy that had underpinned a record rise in the prices of such assets.

Vanda Research highlighted a largely risk-off sentiment among investors in its latest report by pointing to a 4.4% year-over-year drop in single-stock purchases by retail traders to $173 billion even as inflows into ETFs rose nearly 14% to $116 billion. On average, retail investors' portfolios are down about 39% in 2022 after recording gains of 18% in 2021, JPMorgan analysts Peng Cheng and Emma Wu said."The ethos is really starting to spread in the retail investor community that if you want to build wealth through your investments, take a long-term view," Maximilian Rofagha, chief executive officer of Finimize, an abdrn-owned insights firm, told the Reuters Global Markets Forum .

Finimize's recent survey of 2,300 retail punters showed that despite their worries of a recession, only 1% wanted to exit their investments, with about 65% planning to continue investing and 29% aiming to invest more despite the cost-of-living crisis. The investment trend, however, is leaning more toward ETFs tracking broader markets and away from the meme stock frenzy of 2021 that saw retail investors banding together on social media forums to fuel eye-popping gains in GameStop

 

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better late than never. At some point personal wealth is worth more than lolz

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You don't say🙃

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