Study reveals US retail investors boost leveraged ETF trading surge

• Leveraged single-stock ETF trading volume grew 29% annually, outpacing both stock and options trading growth rates
• During the April 2 'Liberation Day' tariff selloff, retail trades in these ETFs accounted for up to 40% of all U.S. market trading activity
• Direxion filed Friday for 20 new ETFs offering 3x daily exposure to individual stocks like Nvidia and Palantir, despite repeated SEC rejections of similar products

Summary: US Retail Investors Drive Leveraged ETF Trading Surge

A new study by Direxion, Vanda Research, and The Compound Insights reveals that individual retail investors account for nearly 90% of all trading in leveraged single-stock ETFs in the US market. These vehicles allow investors to speculate on short-term stock movements with amplified returns.

Key Figures:

• Leveraged single-stock ETFs now represent 8% of total US exchange trading
• 355 leveraged single-stock ETFs currently listed in the US
• 318% surge in products since January 2025 (275 new ETFs launched)
• Trading volume growing at 29% annually, outpacing stocks and options
• During April 2 "Liberation Day" tariff selloff, retail trades in these ETFs reached up to 40% of all US market activity

Market Dynamics:

Asset managers are aggressively competing to capitalize on retail demand for leveraged products. Regulatory changes have simplified product launches, though with "unintended consequences," according to Direxion's chief product officer Mo Sparks.

The SEC continues resisting efforts to approve higher-leverage products. Asset managers have repeatedly sought approval for 3x to 5x single-stock ETFs, but regulators have consistently rejected these applications. Direxion filed again on Friday for 20 new 3x leveraged ETFs covering stocks including Nvidia and Palantir.

Market Implications:

Morningstar analyst Bryan Armour warns the proliferation "illustrates the market's growing reliance on speculation." The April 2025 market volatility around Trump's tariff announcements served as the "first litmus test" for these products during stressed conditions, with questions remaining about retail investor behavior in future selloffs.