According to the latest data, institutional investors are taking over the reins of the US stock market. After years of aggressive buying, retail traders appear to be gradually stepping aside. Meanwhile, data from Vanda Research shows that large investors are still holding stocks steadily in the face of surging US Treasury yields. "Institutional investors showed unexpected resilience during this week's heightened macro volatility," Vanda global market strategist Viraj Patel wrote in a note to clients last Friday. The data shows that institutional investors' options inflow scale ($18.4 billion) was about three times the average for September in previous years. Patel said that despite 10-year and 30-year US Treasury yields climbing to their highest levels in more than a decade, large-capital inflows continued to rise over the past five trading days. He believes that beneath the broader risk-off narrative, this is a "rather constructive signal" hidden within institutional investors' risk appetite.
Patel noted that amid market turbulence, institutional traders are selectively positioning in artificial intelligence (AI)-related names. He specifically pointed out that Meta Platforms (META.US) was one of last week's top picks and is on track to set the third-largest single-week record for institutional bullish options buying in two years. The Facebook parent company's stock surged nearly 13% in the week after it launched the Muse Charm device. Since Meta released its Muse personal AI agent earlier this month, the stock's upward momentum has continued to build. Over a four-trading-day span, institutional net bullish options exposure to Meta increased by $603 million. This aggressive position sizing was second only to Micron Technology (MU.US) across the entire market, while Meta's total bullish options turnover surged 243% compared with the prior week's level. "Macro uncertainty has not stopped risk-taking," Patel said. On the contrary, "it has made investors' stock-picking standards more selective."
Retail Trading Share Shrinks
Retail traders delivered standout performance in 2025, leading many to declare that they had shed the "dumb money" label. Investors partly attributed their strong performance to decisions to buy the dip when market pullbacks were triggered by the Trump administration's tariff policies. But Goldman Sachs data shows that retail investors' share of total S&P 500 trading volume has continued to decline from a peak nearly a year ago. The bank found that the current proportion is more than 3 percentage points below the five-year average.
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