Robinhood has unveiled the Robinhood Investor Index to show how investors are investing based on the top 100 most owned stocks on Robinhood. The Robinhood Investor Index is an aggregate view of the customers’ top 100 most owned investments on Robinhood and tracks the performance of those investments over time.
Unlike most other indices, it isn’t weighted by dollars, but by conviction. The Robinhood platform measures an investor’s conviction for each investment by looking at the percentage it makes up of their portfolio. And to ensure that all investors are equally represented, the company then averages conviction for each investment across all investors, whether they have $20 or $20 million in their account.
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The index will be updated once a month and the company will share insights about where the investors are investing their money. Here’s some data company has gathered so far:
Staples in daily lives, like Microsoft, Apple, and Amazon, are consistently some of the top holdings.
Customers have grown their commitment to the electric vehicle revolution with Tesla at the top, while expanding to Ford and NIO, among others, moving them up the ranking.
Entertainment is also a theme, with Disney and AMC consistently among the top securities.
Overall, the index leans towards large cap stocks with 75% in large cap, 16% in mid cap and 9% in small cap.
Looking at the sector representation, it’s quite diversified, also spanning financial services, energy and healthcare.
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Index Methodology
The Robinhood Investor Index is a proprietary, relative allocation-based index of stocks created by Robinhood and designed to indicate the investments of the customer’s portfolios. It measures how investors are positioned.
The Robinhood Investor Index does this by using data on the stock holdings/positions from 20 million+ funded customer accounts. Robinhood does not include holdings in exchange traded funds (ETFs), options, penny stocks (those priced below $5 that are not traded on a national exchange) or crypto. To focus exclusively on actively acquired positions, Robinhood also excludes holdings in free stocks given to the customers by Robinhood. Robinhood includes accounts that have been open for at least one month, with a minimum equity value of $20, and no maximum value, which enables company to broadly reflect the engaged customers according to their analysis.
In the construction of the index, company utilizes a proprietary method based on a relative allocation within each account. If investors have more of a particular stock in their accounts, the index holds more of that stock. Thus, each investor’s holdings, as a percentage of their total value in stocks, represents a contribution to the percentage in the index. In this way, everyone has the same influence.
It’s important to note that the index does not reflect the positions or performance of any one individual investor, but rather it is an aggregate view of what the customers are investing in on a relative basis. The index weights are re-calculated on a monthly basis, at the beginning of each new month, utilizing values on the last trading day of the previous month. These monthly updates are expected to be published on the dedicated site within 5 trading days after the first trading day of each month. Robinhood will utilize data beginning in January 2020 (the index’s inception date) to calculate the index.