3 ETFs Robinhood's Retail Investors Favor More Than Owning Shares of Palantir, Alphabet, Meta, and Netflix

Roughly three decades ago, the internet revolution changed corporate America forever by opening sales and marketing channels that hadn't previously existed. But the birth of the internet also kick-started the retail investor revolution.

The proliferation of online trading platforms broke down century-old information barriers between Wall Street and Main Street. Retail investors now had access to breaking news, financial statements, balance sheets, management commentary, and investor presentations with the click of a button.

Unsurprisingly, retail investors have played an increasingly larger role in the stock market. According to "The Retail Investor Report," everyday investors comprised approximately 25% of total equities trading volume in 2021, up roughly double from where things stood in the previous decade -- and online brokers have taken notice.

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Few online brokers have done a better job of courting retail investors than Robinhood Markets. Robinhood offers investors commission-free common stock trades on major U.S. exchanges and the ability to purchase fractional shares.

But perhaps the most intriguing aspect of Robinhood's platform is its "100 Most Popular" leaderboard, which lists, in order, the stocks and exchange-traded funds (ETFs) that are most widely held by its customers.

While you'll find plenty of brand-name companies on this list, such as No. 1 holding Nvidia, you might be surprised to learn that three ETFs are more widely held by Robinhood's retail investors than "Magnificent Seven" stocks Alphabet and Meta Platforms, as well as highfliers Palantir Technologies and Netflix.

No. 1 and No. 2: Vanguard S&P 500 ETF and SPDR S&P 500 ETF Trust

The stock market doesn't offer investors any guarantees. However, the closest thing you'll get to a guaranteed positive return is buying and holding an S&P 500 (SNPINDEX: ^GSPC) tracking index over the long run. As of this writing on Feb. 1, the Vanguard S&P 500 ETF (NYSEMKT: VOO) and SPDR S&P 500 ETF Trust (NYSEMKT: SPY) were the fifth- and ninth-most-held securities on Robinhood, respectively. I'm discussing them together because they both aim to mirror the return of Wall Street's benchmark index, minus fees.

Every year, analysts at Crestmont Research update a published data set that calculates the rolling 20-year total returns, including dividends, of the benchmark S&P 500, dating back to the beginning of the 20th century. Based on the latest update, Crestmont has tabulated the total returns of 107 rolling 20-year periods (1900-1919, 1901-1920, and so on, to 2006-2025).

What Crestmont Research found was that all 107 rolling 20-year periods produced a positive annualized return. Hypothetically (since S&P 500 tracking ETFs didn't exist before 1993), if an investor had purchased an index fund that tracks the performance of the S&P 500 and held it for 20 years, they would have made money every time. This statement holds true through pandemics, wars, depressions, recessions, bear markets, and stock market crashes.

Furthermore, since the S&P 500 is comprised of 500 of the largest and most time-tested public companies, it's an index we'd expect to rise over extended periods. This makes both the Vanguard S&P 500 ETF and SPDR S&P 500 ETF Trust good bets to head higher.

While both of these ETFs serve the same purpose and have done a good job of mirroring the S&P 500's total return, there is one critical difference: their net expense ratios. This is the annual fee investors pay that covers a fund's management and marketing expenses.

The SPDR S&P 500 ETF Trust has a net expense ratio of 0.0945%, which is below the average expense ratio of 0.15% for equity index ETFs. This means just shy of $0.95 will go toward fees for every $1,000 invested.

Comparatively, the Vanguard S&P 500 ETF has a microscopic net expense ratio of 0.03%. This six-basis-point and change difference won't amount to much if you're only investing a few thousand dollars or plan to hold for a couple of years. But a seven-figure investment held over several decades can yield significant savings for investors who choose the Vanguard S&P 500 ETF.

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No. 3: Vanguard Total Bond Market ETF

Whereas Meta Platforms, Alphabet, Netflix, and Palantir Technologies fall between the 11th- and 21st-most-held securities by retail investors on Robinhood, the 10th-most-held security is the Vanguard Total Bond Market ETF (NASDAQ: BND).

The Vanguard Total Bond Market ETF aims to track the performance of the Bloomberg U.S. Aggregate Float Adjusted Index. This is an income-focused ETF that purchases U.S. Treasury bonds of varying lengths, along with corporate bonds, asset-backed securities, and mortgage-backed securities. The important aspect being that this fund focuses on investment-grade bonds that, as of the end of 2025, had an average duration to maturity of 5.7 years.

As of the end of 2025, it held over 11,400 bonds and was yielding more than 4%. This compares to its net expense ratio of just 0.03%, which is well below the average expense ratio of 0.54% for similar funds.

The reason the Vanguard Total Bond Market ETF has wiggled its way into the top 10 holdings on Robinhood likely has to do with stock valuations.

According to the S&P 500's Shiller Price-to-Earnings (P/E) Ratio, the stock market entered 2026 at its second-priciest valuation in history, dating back 155 years. Whereas the Shiller P/E Ratio has averaged 17.3 since January 1871, it vacillated in the low 40s throughout January.

Retail investors piling into the Vanguard Total Bond Market ETF suggest there are clear concerns about lofty stock valuations. Prior instances of the Shiller P/E being above 30 haven't gone well for investors. Thus, the Vanguard Total Bond Market ETF serves as something of a safe-haven income investment for those worried about a stock market correction, bear market, or potential crash event.

Sean Williams has positions in Alphabet and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Netflix, Nvidia, Palantir Technologies, Vanguard S&P 500 ETF, and Vanguard Total Bond Market ETF. The Motley Fool has a disclosure policy.