Five ETFs Shaping Retail Investment Strategies: Decoding the Multiples of Growth on Robinhood

Retail traders have emerged as a dominant force in today’s financial markets. According to research from BlackRock, individual investors now account for approximately one-fifth of average daily trading volume in U.S. equities—a remarkable shift from the single-digit percentage levels seen before 2020. This transformation owes much to platforms like Robinhood, which democratized investing through commission-free trading and accessible mobile applications.

Understanding what retail investors are buying has become crucial for gauging market sentiment. Robinhood publishes regular lists of its 100 most-held stocks and exchange-traded funds (ETFs), with several multiples of ETF choices consistently ranking in the top 20. ETFs remain a favorite vehicle because they offer instant diversification through a single purchase—investors gain exposure to entire market segments rather than betting on individual companies.

The S&P 500 Foundation: Why Two ETFs Dominate Robinhood

Two major ETFs compete for retail attention in the large-cap space: the Vanguard S&P 500 ETF (NYSEMKT: VOO) and the State Street SPDR S&P 500 ETF Trust (NYSEMKT: SPY). Though managed by different institutions, both track the same benchmark—the S&P 500 index, which encompasses roughly 500 major U.S. corporations spanning every sector.

Investors favor these ETFs because they provide straightforward exposure to the broader market. When strategists describe being “overweight U.S. stocks,” they typically execute this thesis through an S&P 500 ETF. The appeal is straightforward: low costs, easy trading, and instant access to market-cap-weighted diversification.

However, concentration risk has become a legitimate concern. The “Magnificent Seven”—megacap technology stocks—now command an outsized portion of the index. Some analysts worry that should these giants stumble, the entire index could suffer proportionally. Others counter that weakness in AI stocks could spark rotation into undervalued sectors, gradually rebalancing the index toward healthier multiples of valuation across different segments.

For investors holding these ETFs, maintaining a long-term perspective is essential. Dollar-cost averaging—consistently investing fixed amounts regardless of price movements—can help smooth volatility during periods of market fluctuation.

Bond Market Access Through Vanguard’s Total Fund

The Vanguard Total Bond Market ETF (NASDAQ: BND) has attracted considerable retail interest by providing exposure to investment-grade U.S. bonds denominated in dollars. This ETF excludes Treasury Inflation-Protected Securities (TIPS) and tax-exempt municipal bonds, focusing instead on high-quality corporate and government debt.

Investment-grade bonds deliver steady income through semi-annual coupon payments. According to Vanguard, this ETF’s portfolio features an average coupon of 3.8% and carries an average duration of 5.7 years. Approximately 30% resides in corporate bonds rated between AAA and BBB, while the remainder anchors in government securities.

This ETF fills the “40” in the classic 60-40 portfolio framework—60% equities for growth, 40% bonds for stability and income. Retail investors seeking reliable cash flow without equity market exposure find this fund particularly attractive during periods of stock market volatility.

International Markets: Developed and Emerging Exposure

For investors seeking geographic diversification beyond U.S. borders, Robinhood’s most-held list includes two Vanguard international options: the Vanguard FTSE Developed Markets ETF (NYSEMKT: VEA) and the Vanguard FTSE Emerging Markets ETF (NYSEMKT: VWO).

The developed markets fund grants access to established economies—Canada, Western Europe, and the Pacific region (including Japan and Australia). Within this ETF, approximately 52% of capital concentrates in European equities, while roughly 35% flows toward Pacific markets. Major holdings include chip manufacturer ASML Holding, semiconductor giant Samsung Electronics, and pharmaceutical leader Roche Holding. The fund’s passive management structure keeps expense ratios remarkably low.

The emerging markets ETF pursues higher-growth opportunities in developing economies across China, Brazil, Taiwan, India, and South Africa. Taiwan Semiconductor Manufacturing Company (TSMC) stands as the dominant position, representing nearly 11% of total holdings. Chinese tech leaders Tencent Holdings and Alibaba Group round out the top positions. This fund offers substantial long-term appreciation potential but carries heightened risk—emerging markets remain vulnerable to political upheaval and sudden policy shifts that can dramatically alter economic trajectories.

As U.S. equities trade at elevated multiples compared to international peers, adding overseas exposure becomes strategically appealing. However, investors should avoid overweighting emerging markets given their inherent volatility and political risks. A measured allocation—perhaps a multiples-based framework of smaller positions supplementing core U.S. holdings—provides balanced global participation.

Building Your Multiples Strategy: Practical Takeaways

The five ETFs discussed above represent the multiples of opportunities available to retail traders through Robinhood’s platform. Rather than purchasing individual stocks, these funds offer simplified entry points to diversified asset classes. The combination of U.S. large-cap growth (through SPY or VOO), bond income (through BND), and international diversification (through VEA and VWO) creates a foundation for most investors’ long-term wealth building.

However, selecting ETFs remains only the first step. Maintaining proper allocation through rebalancing, understanding your risk tolerance, and maintaining discipline during volatile periods ultimately determine investment success. The popularity of these funds among retail investors reflects their genuine utility—they democratize access to institutional-quality diversification at minimal cost.

For those considering whether to purchase individual positions in these holdings, remember that timing individual stock selections remains notoriously difficult. Instead, seasoned investors and analysts often recommend focusing on the multiples of gains achievable through consistent, diversified ETF investing over decades rather than attempting to beat the market through active security selection.