Retail Investors Now Make up 20.1% of the Market (And Why That Matters)

If you’ve invested even a little this year, through your 401(k), a Roth IRA, or a handful of stocks in a brokerage account, you’re part of one of the biggest shifts happening in the stock market right now. Retail investors (aka everyday people) are having a moment, and the data shows it isn’t slowing down.

According to new analysis from Jefferies, retail investors made up 20.1% of all U.S. equity trading volume in the third quarter of 2025. That’s our Number to Know this week. And it’s a big deal.

Not only is that the second-highest share on record (only behind the meme-stock spike in early 2021), it’s nearly double the share retail investors held back in 2010. For reference, the long-term average since 2010 is 15.8%.

Let’s break down what the data actually says and what it means for you.

Table of Contents

1. Number to know: 20.1%
2. What this rise means for regular people
   1. Why it’s good
   2. What to stay mindful of
3. How is the market actually doing in 2025?
4. Zoom out: How we got here
5. How retail shaped the 2025 market
   1. 1. Slightly higher volatility
   2. 2. Momentum strategies worked unusually well
   3. 3. Growth stocks stayed hot
6. What all of this means for your money

Your number to know: 20.1%

That means everyday investors now account for roughly one out of every five trades happening in the stock market.

Ten years ago, that number was closer to one out of 10.

Here is what’s driving the rise:

• Better access. Zero-commission trades, fractional shares, and easy-to-use apps are removing many old barriers to entry.
• Bigger communities. People are learning to invest through TikTok, Reddit, Discord, YouTube, books, podcasts, and friends, instead of only financial advisors.
• Market share shifts. The share of retail investors in the market began to shoot up at the start of the pandemic as the share of long-only and hedge-fund investors went down.

And here’s the part we love: Retail participation now exceeds the trading activity of long-only mutual funds and traditional hedge funds combined, according to Financial Times.

What this rise means for regular people

More retail participation is generally a good thing for long-term investors, but it comes with a few realities to keep in mind:

Why it’s good

• It signals that more people are investing for their future. And more participation means more people are building generational wealth, especially those who started investing for the first time during or after the pandemic.
• Long-term, steady investors benefit from the same market growth institutions do. (Research shows that passive index strategies have historically outperformed most actively managed equity funds by roughly 92% of large-cap active mutual funds over the past two decades.)

What to stay mindful of

• Much this surge may be tied to the current bull market. As the Financial Times points out, retail activity tends to spike when markets are strong and cool off during downturns. If we hit a rough patch, trading volume from individuals could easily shrink, just like it did in 2022.
• Active trading is still risky. The rise in retail volume doesn’t mean day trading is easier or more profitable. Most people do better with a steady, long-term strategy rather than chasing momentum or trying to time the next rally.
• Part of the “retail surge” is structural. Some of the increase is happening because hedge funds and certain institutional players now make up a smaller slice of trading than they used to, which naturally makes the retail percentage look bigger.

How is the market actually doing in 2025?

If you’ve been investing through all the noise this year, the numbers might surprise you … in a good way. As of December 15, the S&P 500 is up 15.89% in 2025, which builds on a pretty remarkable stretch of returns since the pandemic.

Here’s the rundown:

• 2024: +23.31%
• 2023: +24.43%
• 2022: –19.44% (the reset year)
• 2021: +26.89%
• 2020: +16.26%
• 2019: +28.88%
• 2018: –6.24%
• 2017: +19.42%
• 2016: +9.54%
• 2015: –0.73%

Even with a couple of down years in the mix, the trend is overwhelmingly positive.

Outside the S&P, the Dow Jones Industrial Average is up 13.80% year-to-date, which is a solid year by any measure. And if you zoom out, the long-term picture looks just as steady:

• 10-year annualized return: 10.70%
• 5-year annualized return: 9.90%
• 3-year annualized return: 13.40%
• 1-year return: 10.47%

These numbers tell us one thing: When you keep investing during the ups, the downs, and the “should I just sit this out?” moments, you can be rewarded. You don’t have to pick winners or time anything. You just need to start investing and stay in.

Zoom out: How we got here

If you look at the bigger picture, this rise in retail investing is part of a longer trend that started well before 2025. The tools got easier, fees disappeared, and investing slowly shifted from something “Wall Street people do” to something everyday people felt empowered to try.

But the real turning point was the pandemic. Millions of new investors opened accounts for the first time, and unlike during past market surges, many stayed. Even after the 2022 downturn, retail activity fell only to an elevated level before climbing again.

At the same time, the makeup of the market changed. Some institutional players now command a smaller slice of trading than they used to, which naturally pushes the retail share higher even when trading isn’t frenzied.

How retail shaped the 2025 market

According to Jefferies’ analysts, everyday investors helped shape how the market behaved this year in several ways.

1. Slightly higher volatility

Daily swings have been a bit bumpier than the pre-COVID years, which could suggest that more real people are making real-time decisions rather than only institutions setting the tone.

2. Momentum strategies worked unusually well

Stocks that were already climbing tended to keep climbing. Part of that comes from retail investors leaning into recent winners instead of hunting for deep value plays.

3. Growth stocks stayed hot

Even in an environment where value stocks typically shine, investors continued piling into growth, especially tech. Analysts say retail enthusiasm played a role here, too.

What all of this means for your money

The best thing about the rise in retail participation is that it’s happening alongside solid long-term market performance. When more people invest consistently, the positive effects compound:

• More people build long-term wealth.
• More people stay invested through downturns.
• More people participate in the strongest years, like 2023 to 2025.

It also means that choosing to invest doesn’t mean you need to watch the market every day, guess the next winner, or trade constantly. You just need to take a steady, long-term approach. And when you do, it could pay off.

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