Robinhood (NASDAQ:HOOD) rose to acclaim and some derision at the height of meme stock mania in 2020. While that reputation may take longer to shake, users of the mobile trading app could be more practical than they’re given credit for.
In fact, some of the favorite holdings of Robinhood clients are among the most widely held stocks in the world and are easily accessible via any number of practical exchange traded funds, including the Invesco QQQ Trust (QQQ) or the Invesco NASDAQ 100 ETF (QQQM).
Last Friday, Robinhood introduced the Robinhood Investor Index, which is a collection of the 100 stocks that account for the largest percentages of client portfolios. Assets such as bitcoin and ETFs are not included in the index.
“We measure a customer’s conviction for each investment by looking at the percentage it makes up of their portfolio,” according to the financial services company. “And to ensure that all customers are equally represented, we average conviction for each investment across all customers, whether they have $20 or $20 million in their account. Our data tells us that Robinhood customers invest in the companies they’re passionate about, and the Robinhood Investor Index aims to make their voices heard.”
Among the stocks that Robinhood clients are displaying the most positive conviction toward are Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT). Those stocks combine for 23.53% of the QQQ and QQQM portfolios.
While Robinhood clients developed a reputation for being comfortable with risk, 75% of the companies included in the Robinhood Investor Index are large-cap names, which jibes with the large-/mega-cap postures of QQQ and QQQM. Likewise, more than half of the members of the Robinhood Investor Index hail from the communication services, consumer discretionary, and technology sectors. Those three sectors combine for over 82% of QQQ and QQQM.
Other familiar names in the Robinhood index include Amazon (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA). Those are the top two consumer cyclical holdings in QQQ and QQQM, combining for almost 12% of the ETFs’ rosters.
“Over the last several years, we’ve seen our customers—and millions more like them—play an increasingly important role in the market. With the launch of the Robinhood Investor Index, we’re giving customers, and the world, a look at everyday investor positioning and performance on Robinhood,” added the brokerage firm.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
