Smaller Retail Investors Could Propel These Big ETFs in 2023

As has been widely documented, 2022 will go down as a rough year for technology stocks and the related exchange traded funds, but that’s not keeping some retail investors from remaining devoted to the sector.

In fact, retail investors are rather enthusiastic about tech stocks heading into 2023, and that could be a positive for ETFs, including the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM). Both ETFs track the Nasdaq 100 Index (NDX), which is lower by more than 28% year-to-date, confirming weakness in large- and mega-cap growth stocks.

The potentially good news for QQQ and QQQM can be seen in a recent Finimize survey of more than 2,000 retail investors from Asia, Europe, and the U.S., which indicates that these market participants are enthusiastic about select growth stocks heading into 2023, including Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Google parent Alphabet (NASDAQ:GOOG), and Facebook parent Meta Platforms (NASDAQ:META). That quartet combines for nearly a third of the QQQ and QQQM rosters.

While retail traders won’t ever be confused with professional asset allocators, the former is growing in potency and assets.

“The retail investment community is set to account for 61% of all assets under management globally by 2030, up from 52% in 2021, according to wealth management strategy consulting firm Indefi,” reported Ryan Browne for CNBC.

Potentially supporting the case for QQQ and QQQM rebounds in 2023 is the point that, according to the Finimize poll, just 1% of retail investors plan to liquidate positions next year, while 94% either expect to maintain current positions or add new investments to their portfolios.

“This data is proof that even in the current market environment, the majority are seeing volatility simply as part of the economic cycle thanks to access to information and growing experience with investing,” said Finimize CEO Max Rofagha in a press release. “Additionally, it is clear that the retail investor narrative is changing. For example, previously there has been a focus on how a tiny population of day traders is behaving.”

Max Rothery, vice president of community at Finimize, said in an interview with CNBC that market participants shouldn’t expect a retail investor sequel to Gamestop (NYSE:GME), noting that retail investors are likely to be more restrained in 2023 in terms of quickly moving in and out of positions. However, they will continue investing in more prudent fashion.

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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.