Robinhood Markets Inc TITLE has launched a new stock index reflecting the top 100 stocks of its clients.
What’s going on? On Friday, Robinhood announced the Robinhood Investor Index, a market index that reflects only the highest-confidence stocks of its user base.
The index is measured by the percentage of each user’s portfolio allocated to the stock, regardless of the size of their portfolio. One blog postRobinhood said it wants the index to represent investments that all of its users are passionate about, not just the stocks its biggest investors own.
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Robinhood said the index is 75% weighted to large-cap stocks, but will be updated once a month to accurately reflect what its customers are buying.
Retailer landscape: Robinhood traders gained notoriety for their aggressive and sometimes reckless speculation during the 2021 meme stock trading frenzy. Unprecedented trade volume in Azerbaijan AMC Entertainment Holdings Inc AMC, GameStop Corp. GME and other stocks forced Robinhood to temporarily stop buying these stocks in early 2021.
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As of June 2022, Robinhood has approximately 22.9 million users. The company preferred the democratization of investments. Its user base is relatively young and inexperienced in the market.
The average age of Robinhood users is 31, and about half of its users are first-time investors. A spokesperson for Robinhood The next counselor said.
Best Robinhood Holdings: Despite the youth and inexperience of Robinhood users, the top 10 holdings in the Robinhood Investor Index include several high-quality blue-chip names sprinkled with a few high-risk meme stocks:
- Tesla Inc TSLA
- Apple Inc AAPL
- Amazon.com, Inc. AMZN
- Ford Motor Company F
- AMC Entertainment
- Microsoft Corporation MSFT
- Nio Inc – ADR NIO
- Walt Disney Co DIS
- AMC Entertainment Hldg Pref Equity Units APE
- GameStop
Reception of Benzinga: The chart above, included in Robinhood’s blog post on Friday, compares the historical performance of the Robinhood Investor Index to the performance of the Nasdaq Composite Index since the start of 2020, which may show what investors can expect from the Robinhood Investor Index in the future. .
The Robinhood index outperformed the Nasdaq during the market boom in 2021, underperformed during the market weakness in 2022, and has now generated total returns almost exactly in line with the Nasdaq since the start of 2020.
Illustration courtesy of Robinhood.
