Retail Investors Outperform Mutual Funds by Record 16 Percentage Points in May

According to The Kobeissi Letter, retail investors' favored stock portfolio outperformed mutual fund picks by 16 percentage points in May, the largest monthly margin since 2018. The retail portfolio is concentrated in large-cap tech stocks, including the "Magnificent 7" and semiconductor names.

Retail investors achieved a 14 percentage point outperformance in April, bringing the two-month combined excess return to a historic high, surpassing the previous record of 13 percentage points set during the meme stock rally in late 2020. Additionally, retail investor capital deployed in semiconductor options reached 4.9 times the monthly historical average, hitting a new record and approximately 25% higher than the previous record in March 2024.