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The starters are all about bonds in 2020, but may now be leading fees into stocks

The American generation has more wealth than any other generation – baby boomers – are all about bonds by 2020, but are just starting to return to the stock market.

That’s according to independent research firm Vanda Research, which tracks its latest weekly data showing individual investors returning to stocks earlier than expected after a bleak February. And leading the group are Americans born between 1946 and 1964, Vanda Research said.


“The boomers bought more bonds than stocks throughout 2020, while millennials bought stocks actively. Former investors started re-entering the stock market only late last year (November 2020) and their performance peaked this month. Giacomo Pierantoni, Research Analyst at Vanda, in the comment sent by email.

Since mid-February, individual investors have outperformed the S&P 500
+ 0.25%

up 11%, according to VandaTrack, which provides daily data on the net buying of individual investors for US stock exchange funds. Analysts expect a period of hibernation after that, but new data shows that average daily purchases of U.S. stocks hit $ 1.2 billion on April 6, followed by 1.5. USD billion on April 7, more than double the low of $ 772 million on March 26.

That has inspired Vanda analysts to consider where a share push could come from. “Some data suggests that richer individuals of the boom generation may have been responsible for the increased purchases. The average age of investors in platforms like Schwab or TD Ameritrade is close to 50 and they are a lot richer than millennials, ”Pierantoni and senior strategist Ben Onatibia said in a note. .

As of Q4 2020, the boom generation owns just over half of all U.S. household assets, according to the report data from the Federal Reserve. That’s $ 64.72 trillion, compared with $ 5.89 trillion for millennials born after 1980 and $ 33.06 trillion for Generation X, born between 1965 and 1980.

The types of shares being bought also provide clues, they say. “Their behavior is also a lot more conservative than young investors.” Most of the stocks that made our top spot this week were high quality blue chips, while the more speculative stocks such as [videogames retailer GameStop]

or [movie-theater chain]

dropped out, ”they said.

The chart below from VandaTrack shows the average volatility of the 30 most bought stocks per week (relative to S&P). The chart also “suggests that investors are more cautious than previous rallies,” they said.


The continued strong rollout of the COVID-19 vaccine in the US and President Joe Biden’s $ 1.9 trillion infrastructure package could encourage investors to invest in stocks, even in markets. The school seems to be leveling off at a recent record high.

Another reason Vanda doubts the market boom is the unusually large inflow of sovereign bonds and credit exchange funds.

Last week, individual investors pumped more than $ 416 million into the 30 largest fixed-income ETFs traded in the US, the largest amount on record. IShares iBoxx $ Investment Level Corporate Bond ETF
+ 0.16%

is the largest contributor, with $ 128 million purchased, Vanda said.


Charles Schwab, Vanda

“While most Robinhooders tend to stay away from ‘boring’ fixed income products, boomers, those closer to retirement, generally prefer them over stocks. Monthly data from Charles Schwab clients shows cash flows into bond ETFs and MFs [mutual funds] Pierantoni and Onatibia said.

Read: ETF Wrap: A year and change, and OK, boom



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