With the broader U.S. stock market hitting new highs, more retail investors have been tip-toeing back into the stock market. And while history indicates that the return of mom-and-pop investors signals an end to the market rally, this time around more strategists say that calling a top could be premature.
Mutual funds and exchange-traded funds recorded net inflows of $4.5 billion in the last week, according to data from Thomson Reuters' Lipper service, with equity funds accounting for nearly $740 million in total net sales. Mutual funds continued to dominate inflows for the 12th straight week, with inflows of $2.3 billion last week, bringing total mutual inflows to $75.2 billion for the year so far.
The inflow is usually a bullish indicator for markets, especially as outflows have been more common in years following the financial crisis.
"After several years of outflows, we've been seeing better inflows so far this year, and we think we have a ways to go," said John Fox, co-manager of the FAM Value Fund. "It's driven today by people who feel that they've been missing out, but we're still in the early innings of retail investors coming back."
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