Investor risk appetite hits five-year high, Goldman Sachs data shows

Investors are taking on more risk than they have in five years, even as global tensions continue. That’s according to new data from Goldman Sachs Group Inc.

The Wall Street bank’s risk appetite indicator hit 1.09 last week. It’s the highest level since 2021. The reading puts current investor behavior in the 98th percentile compared to all measurements taken since Goldman created the gauge in 1991.

“Such elevated levels of risk appetite are rare,” the Goldman team wrote in a research note seen by Bloomberg. The bank has only recorded six other instances where the indicator climbed above 1.0. But the strategists say this isn’t necessarily a red flag. “Equity returns can be sustained by a supportive macro backdrop,” they said.

Nearly every component tracked by the Goldman index shows investors favoring riskier assets. This reflects the broader stock market gains that started last year and continued into 2026.

Small caps lead the charge

The strongest signals come from investors picking small-cap stocks over large-cap companies.

Small-cap stocks have had a strong start to the year. The Russell 2000 index jumped 7.5% in its best opening since 2021, CNBC reported on January 26, 2026. The index beat the S&P 500 by more than 830 basis points in just 15 trading sessions. A Jefferies strategist called the performance “incredible.”

There are good reasons for the shift to smaller companies. Analysts expect the Russell 2000 to grow earnings between 30% and 35%, compared to 22% growth for the Magnificent 7 large-cap technology stocks, according to a January 27, 2026 report by FinancialContent. Smaller companies also benefit from Federal Reserve rate cuts, which ease the pressure from their floating-rate debt.

Wall Street’s rotation away from big tech

As reported by Cryptopolitan previously Wall Street has been increasingly bullish on riskier stocks, with investors placing more bets on the Russell 2000 than on the S&P 500. Last week, tech sector funds saw $900 million in outflows, while $8.3 billion went into other industries including materials, health care, and industrials.

Emerging market stocks have also attracted significant investor attention, with some indexes posting their longest winning streaks in decades. The preference for emerging markets reflects confidence that global economic conditions will support these higher-risk investments.

Gold prices are one of the few signs that some investors remain cautious. The precious metal has more than doubled over the past two years. Investors have bought gold as a safe place amid political risks and as an alternative to currencies and bonds.

Goldman strategists said removing gold from their risk calculation would have pushed the index even higher.

The bank’s strategists are overweight on equities based on the current economic environment. This means they think stocks will keep delivering strong returns.

Despite previous warnings about market risks, the combination of economic optimism and risk-taking behavior marks a shift in investor psychology. While geopolitical concerns remain present, they appear to be taking a back seat to positive expectations about economic growth and corporate earnings.

The data shows investors are moving money into assets traditionally seen as riskier but offering higher potential returns. How long this appetite for risk lasts depends on economic performance in the coming months and whether current conditions hold up.