Three things to know about individual investor ETF activity

The number of individual investors — those who invest their own money to save for retirement or meet other financial goals — participating in financial markets has grown significantly in recent years.¹ As a result, trading by individual investors in U.S.-listed ETFs has also increased, with trading volumes, measured by the number of ETF shares traded multiplied by the price of the ETF shares, growing at a three-year compound annual growth rate of 52% (Figure 1).

We believe individual investors’ increased use of ETFs has been driven by a few key factors: an industry shift to commission-free trading, improved digital experiences on direct platforms, and investor empowerment stemming from greater access to financial education through social media and other forums.

Below are some key statistics that illustrate how individual investors are engaging with the U.S. ETF market (Figure 2).

As equity market volatility largely subsided in Q2 2023, total U.S.-listed ETF trading volumes and individual investor ETF trading volumes were down slightly compared to Q1 2023. Still, trading activity grew in some areas, in addition to other notable takeaways.⁴

• Individual investors increased their use of actively managed ETFs. Individual investors accounted for nearly 31% of all actively managed ETF volumes in the quarter, up from 28% in Q1 2023 and 24% in 2022.⁵
• Individual investors increased their use of fixed income ETFs. Individual investor trading activity in fixed income ETFs accounted for over 15% of total fixed income ETF volume in Q2 2023, up from 13% in Q1 2023.⁶
• Individual investors increased their use of leveraged ETFs. Individual investor trading activity in leveraged ETFs accounted for over 34% of total leveraged ETF volume in Q2 2023, up from 33% in Q1 2023.⁷
• Individual investors continued to trade ETF options. Individual investors drove 23% of all ETF option activity, in line with Q1 2023.⁸ However, there was continued usage of zero days to expiration (0DTE) options, which have become increasingly popular investment tools among individual investors.⁹