Retail investors have a new favorite sector outside of tech

Published Wed, Feb 9 202210:25 AM ESTUpdated Wed, Feb 9 202211:09 AM EST

Energy is far and away the top-performing S & P 500 group this year after also outperforming in 2021, and retail investors are hopping on the bandwagon. Outside of tech, retail investors are loading up on shares of materials and energy companies, according to the latest data from Vanda Research. The firm said that inflows into energy specifically are the largest since the second quarter of 2020. The sector attracted a frenzy of activity in April 2020, when West Texas Intermediate crude futures — the U.S. oil benchmark — dipped into negative territory as the pandemic sapped demand for petroleum products. For 2022, the energy sector is up 23.3% through Tuesday's close. The only other sector in the green for the year is financials, which is up just 4.3%. In 2021, the energy sector gained 47.7%. On a stock-specific level, the 2022 winners thus far are Halliburton and Occidental , which are up 39% and 36%, respectively. Every component in the sector is up at least 10% this year apart from Kinder Morgan and Oneok , which are up 9% and 7%, respectively. Vanda Research's data showed that retail investors are singling out names like Chevron and Marathon Petroleum . Vanda is an independent research firm which tracks retail investing flows for institutional customers. For Chevron, the firm said net retail purchases over five days topped $22 million. Vanda Research said that retail volumes over the last five days in refiner Marathon Petroleum surged 123% compared with the average activity one month ago. Devon Energy is also seeing interest from retail investors, with individual buyers accounting for 13% of total volume in the company's stock over the last five days. Shares of the exploration and production company have surged 171% over the last year, making it the top performer within the energy sector. And it's not just retail investors that are buying energy stocks — institutional investors are too. Bank of America said Monday that its clients bought energy stocks for the second week in a row after some selling earlier in January. The firm said that energy stocks have seen "more persistently positive flow momentum since August," but said the sector remains underowned by investors. —CNBC's Michael Bloom contributed reporting.

A Nabors Industries worker uses a power washer to clean the floor of a rig drilling for Chevron in the Permian Basin near Midland, Texas.

Daniel Acker | Bloomberg | Getty Images

Energy is far and away the top-performing S&P 500 group this year after also outperforming in 2021, and retail investors are hopping on the bandwagon.