Key insights
- According to Charles Schwab, retail investors are diversifying from Big Tech into broad sector ETFs, indicating a search for lower volatility rather than outright de-risking. This shift suggests a cautious approach, balancing geopolitical concerns with the fear of missing potential snapback rallies. Buying activity was noted in oversold large-cap stocks like Nvidia, Tesla, and Microsoft.
Charles Schwab head trading and derivatives strategist Joe Mazzola joins Yahoo Finance Markets and Data Editor Jared Blikre to explain why some investors are choosing to migrate their money from Big Tech to exchange-traded funds (ETFs).
you know, if you look, the the stats pulled back, that's what we call our Schwab Trading activity index. It pulled back about 2%. Uh still well within the overall market pull back of about 7 and a half% within that time. And what we didn't see Jared was a big de-risking. What we saw more of a was more diversifying and I'll give you an example of what I mean here. Uh normally when we have our top 10 list, uh they they traditionally are uh mostly tech names and you might see one or two ET
apps that make that list. This month, in this past month in March, five ETF names uh made that top five buy or top excuse me, top 10 buy list, which really just shows that investors weren't really kind of pulling out of the market. They were just looking for uh a little bit less volatility, a little bit less beta and moving into ETFs. And and I think that there's still a concern, you know, number one with the geopolitics, but there's also on the other hand a concern when they think back to what happened in April of last year. Do you want to miss those couple days or those couple weeks when the market gets those furious snapback rallies?
Can you name some of those areas, maybe some of those ETF areas that investors were trying to diversify into?
Yeah, they were broad sector ETFs. So they none of them were, you know, specifically sector ETFs. I think what we did see is you you see a little a little bit of maybe some um some factor movement in there where you you did see some of the oversold uh maybe large cap stocks that we saw some big buying in Nvidia being one, Tesla, Microsoft. you know, I I you were showing that um comparison chart earlier with software versus chips. I mean, you you got to remember Microsoft was down what 25, 26% year to date at one point. So there's definitely some reaching for some names where they believe uh that these are kind of core holdings when the within the portfolio and and and they're getting them at a discount right now.