Index investing has been proven to outperform active investing, and billionaires like Warren Buffett advocate for the use of index investing. Market indices track the performance of a group or basket of stocks that may represent a certain sector, industry or location. For example, the Nasdaq-100 is made up of 100 of the largest non-financial companies in the world, so investing in the index allows you to diversify your portfolio.
Traditional indices are based on their market capitalization — the value of outstanding shares — and growth potential. But, there’s now another approach: The Robinhood Investor Index. This revolutionary tool offers an aggregate view of the 100 top stocks owned by Robinhood customers. Rather than choosing stocks based on dollar value, the Robinhood Investor Index selects stocks based on the level of conviction users have in each stock, democratizing the retail investment market.
Here are the key features of the new index:
A New Way to Track Market Sentiment
Although the Robinhood Investor Index isn’t available for direct investment, it can act as an important tool for market analysis. It’s different from other indices in that it contains a mix of large-, mid-, and small-cap stocks. By including multiple stock categories, it provides a more comprehensive view of the market.
Monthly Updates to Remain Current
Some stock market indices are fairly static; they’re updated quarterly, so they may not reflect our modern, rapidly changing investment world. By contrast, the Robinhood Investor Index updates its holdings monthly, ensuring that it reflects the latest trends among investors.
Sector Diversity
Gone are the days when investors focused on one or two industries or countries. Today’s investors have much more varied interests, and the Robinhood Investor Index reflects that trend. It includes multiple industries, including stocks in technology, finance, healthcare, entertainment and energy. And, it includes both domestic and international stocks, helping investors research stocks driving retail investor enthusiasm.
Index Investing for All
The Robinhood Investor Index allows investors to gain unique insights into retail investor behavior, and make informed decisions about how to invest their money based on how they think the market will evolve. Stay ahead of trends by understanding what millions of retail investors are focusing on right now to grow your money over time.1
