Schwab: Investors are looking for diversity
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September is historically a weaker-performing month for stocks, yet Charles Schwab's clients plowed into the market just the same, data from the brokerage giant shared exclusively with Axios shows.
- Last month's buying activity was centered in large part on broader market exposure through exchange-traded funds, or ETFs, rather than in single stocks, Schwab says.
Why it matters: The data suggests that investors, while still bullish on stocks, have turned a bit more cautious, especially at a time of rising interest rates.
By the numbers: The Schwab Trading Activity Index, or STAX, rose to 58.92 in September, up from 57.50 in August, data out Monday shows. Schwab calculates this index by analyzing the stock positions and trading activity from its millions of client accounts.
- Of the top 10 net buys by Schwab clients in September, five were ETFs.
- That's the first time that has happened since Schwab began the index in 2019, Joe Mazzola, head trading strategist at Schwab, tells Axios.
- Buying by sector was broad, with 7 of the S&P 500's 11 sectors showing net buying for the month.
What they're saying: The big change that has slowly emerged from the data over the last several months is that "diversification is favored over stock picking," Mazzola says.
- Retail investors "don't want to be picking stocks in this market."
What to watch: A recent, separate survey of more than 450 Schwab clients paints the outlook for October as more bearish.
- While retail investors have been a force in the market by their willingness to buy the dip, among the responding Schwab clients, only 31% of retail investors said they would be more willing to do so, compared with 58% of those considered to be active traders.
