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 remained low in Q3 2023, total U.S.-listed ETF trading volumes and individual investor ETF trading volumes were in line with Q2 figures and down compared to Q1 volumes.⁴ Still, there were some notable takeaways:

• Individual investors increased their use of iShares ETFs. Individual investor trading activity in iShares and BlackRock ETFs represented 17% of all individual investor trading, up from 16% in the prior quarter and 15% in 2022.⁵
• Individual investors decreased their use of leveraged ETFs. Individual investor trading activity in leveraged ETFs accounted for over 31% of total leveraged ETF volume in Q3, down from 34% in Q2.⁶
• Individual investors continued to use actively managed ETFs. Individual investors accounted for nearly 31% of all actively managed ETF volumes in the quarter, in line with Q2 and up from 24% in 2022.⁷
• Individual investors continued to trade ETF options. Individual investors drove 22% of all ETF option activity, slightly down from Q2 (23%).⁸ Use of zero days to expiration (0DTE) options, which have become increasingly popular investment tools among individual investors, continued over the period.⁹