Robinhood Markets Inc (NASDAQ: HOOD) chief executive Vladimir Tenev says retail investors are now outpacing professional fund managers in 2025.
Markets often view individual investors as speculative traders at best.
However, this year they have embraced a long-term, conviction-led strategy that’s proving more resilient than the institutional players’ macro-focused model.
Speaking recently with CNBC, Tenev highlighted a seismic shift in investor behaviour following “Liberation Day” – when Trump’s aggressive tariffs triggered a wave of uncertainty across global markets.
“They bought the dip” in companies they believed in for the long term – and “they won”, the chief executive noted, referencing a sharp recovery in the S&P 500 since early April that’s pushed the benchmark index well past its pre-tariff high.
VandaTracks’ latest update backs his claim: since April 1st, retail investors have poured a record-breaking $85 billion into US equities and exchange-traded funds (ETFs), marking the highest inflow for that period since 2021.
Belief-driven investing is paying off for retail investors
According to Vladimir Tenev, retail investors are outperforming professionals this year primarily because of a fundamental shift in mindset.
“What you’re seeing is retail investors are investing in these companies because they believe in them,” he explained.
Unlike institutional investors who often react to macroeconomic signals, such as interest rate forecasts, tax policy shifts, or geopolitical tensions, retail investors are focusing on the intrinsic value and long-term potential of individual companies.
This approach has led to concentrated interest in high-conviction names like Nvidia, Tesla, and Amazon.
“When they see a massive macro-driven dislocation, they look at that as a buying opportunity,” Tenev said, emphasizing that retail investors are less swayed by short-term noise and more attuned to the idiosyncratic strength of their chosen stocks.
Robinhood’s platform has played a pivotal role in democratizing access to markets.
With commission-free trading and real-time data, it empowers users to act swiftly and independently.
Tenev noted that this autonomy allows retail investors to avoid herd behaviour and legacy thinking, traits that often constrain institutional decision-making.
Institutional constraints vs retail agility
Professional fund managers face a host of limitations: regulatory compliance, risk management protocols, and performance benchmarks that can stifle nimbleness.
In contrast, retail investors operate with greater flexibility, enabling them to respond to market shifts with speed and conviction.
This divergence is reshaping market dynamics. As Tenev put it, “This conviction-led strategy is a significant divergence from the behavior of retail investors in the past, which is healthy for the markets.”
With macroeconomic volatility expected to persist, the rise of belief-driven investing may continue to challenge conventional wisdom.
Whether this trend holds through future cycles remains to be seen, but for now, retail investors are rewriting the playbook — and winning.
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