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Investors Buy Less Volatile Shares, Ameritrade Says

Individual investors bought shares of less volatile companies and took protective measures by hedging their holdings last month as the Standard & Poor’s 500 Index reached a five-year high, TD Ameritrade Holding Corp. (AMTD) said.

“We’re seeing a step back here,” Steve Quirk, senior vice president of TD Ameritrade’s trader group, said yesterday by telephone. “Some of our clients are saying, ‘I’ve had some pretty nice appreciation in my portfolio. I’m going to wind it down a bit here.’ We love to see that. That means they’re being prudent in their judgment.”

A gauge of investor sentiment compiled by the Omaha, Nebraska-based company showed bullishness among individual investors declined. The Investor Movement Index, a gauge that tracks sentiment by analyzing trading from a sample of the firm’s six million retail client accounts, fell to 4.71 last month from 4.94 in December, based on a Feb. 4 statement from the online brokerage. That is still higher than the average since January 2010 of 4.56.

Investors poured money into equities last month as the S&P 500 capped its best January since 1997 after companies posted better-than-estimated profits and lawmakers reached a budget compromise. About $16.1 billion went into domestic equity mutual funds in the three weeks through Jan. 23, data from Investment Company Institute show. That’s after investors pulled more than $600 billion from U.S. funds since 2007, Washington-based ICI data show.

Ameritrade’s measure of investor sentiment has climbed 37 percent since the beginning of 2012. When the gauge hit a record of 5.56 in June 2011, the S&P 500 dropped as much as 19 percent from July through October.

To contact the reporter on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

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