US retail investors are showing a preference for ETFs over individual stocks, according to UBS’s market making clients. Despite the second-lowest dollar volume day of 2026, with inflows totaling $48 million, volumes slid by 18% compared to this year’s average. ETFs were the primary driver of inflows, indicating a trend towards diversification and passive investing.

On the other hand, outflows were led by information technology, which has been a popular sector among retail investors in recent months. However, outflows were seen in all single stock sectors except real estate and utilities, suggesting a shift away from individual stock picking and towards more diversified investment strategies.

The decline in volumes could be attributed to a number of factors, including market volatility, economic uncertainty, and changes in investor sentiment. It is also possible that investors are taking profits after recent gains or adjusting their portfolios in response to shifting market conditions.

Despite the decline in volumes, the preference for ETFs among retail investors highlights a growing trend towards passive investing and index fund adoption. As the market continues to evolve, it will be interesting to see how this trend plays out and whether ETFs will continue to gain popularity among retail investors.