Overview
New analysis conducted by an ETF issuer in collaboration with two research firms shows that individual traders are the dominant force behind trading in leveraged single-stock exchange-traded funds (ETFs) in the U.S. market. The study attributes nearly 90% of trading in these instruments to retail investors and highlights how the fast expansion of such products has been driven largely by their appeal to that cohort.
Scale and recent growth
The report notes that activity in leveraged single-stock ETFs grew quickly after their U.S. market introduction in late 2022. Trading volume for these funds expanded at an annualized pace of 29%, a rate that outstripped growth in trading across both individual equities and options, according to the study. Last year, transactions in leveraged single-stock ETFs represented 8% of total trading across all U.S. exchanges.
Data from Morningstar Direct cited in the study shows there are now 355 leveraged single-stock ETFs listed in the United States. Of that total, all but 80 were launched after January 2025, illustrating a sharp acceleration in new product rollouts.
Issuer and industry commentary
Mo Sparks, chief product officer at Direxion, said interest in trading volatility and competition among asset managers have both increased as firms seek exposure to rising retail demand for leveraged products. He added that changes in regulatory guidance on the use of leverage have made it simpler to bring these vehicles to market, though he acknowledged those changes have produced some "unintended consequences." Sparks also declined to comment on pending filings under SEC review.
Morningstar ETF analyst Bryan Armour was quoted in the research as saying: "The vast number of launches illustrates the market’s growing reliance on speculation." That observation accompanies the study's data showing a notable proliferation of single-stock leveraged ETFs over a short period.
Regulatory dynamics
Asset managers have repeatedly requested permission from the Securities and Exchange Commission to offer single-stock leveraged products that would provide three to five times the daily return of the underlying shares. The SEC has repeatedly resisted those proposals, and the regulator's pushback remains a central uncertainty for issuers and investors.
Despite that resistance, Direxion filed on a recent Friday to offer a suite of 20 ETFs tied to single stocks, ranging from Nvidia to Palantir. If approved, those funds would provide traders with three times the exposure to daily moves in the underlying shares.
Retail behavior during stress episodes
The study examined how these products performed during a significant market selloff in the past 12 months connected to announcements on April 2 related to tariffs by the sitting U.S. president, an episode the report describes as the first real "litmus test" for retail traders operating under stress. During that period, which concluded with a series of sizable market advances, retail trades in leveraged single-stock ETFs at times accounted for as much as 40% of total trading activity across U.S. markets.
Researchers noted the episode raises questions about how these funds might be used in future selloffs and what that could mean for market behavior when retail traders face heightened volatility.
Conclusion
The study paints a clear picture: leveraged single-stock ETFs have become a retail-driven phenomenon. Rapid product launches, elevated annualized growth in trading volumes, and outsized retail participation during a stress episode underline both the market traction for these instruments and the open questions about their broader market implications.
Key data points from the study
- Nearly 90% of trading in leveraged single-stock ETFs in the U.S. is attributable to individual investors.
- Leveraged single-stock ETF trading grew at an annualized rate of 29% since their late 2022 debut.
- Last year, leveraged single-stock ETFs made up 8% of total trading across U.S. exchanges.
- There are 355 leveraged single-stock ETFs listed in the U.S., with all but 80 launched since January 2025.
- During the market turmoil around April 2 tariff announcements, retail trades in these funds sometimes represented up to 40% of total U.S. market trading activity.