Direxion Trader Sentiment Survey: Active Traders are Sharing Key Trends and Insights that Guide their ETF Investment Strategy
The Direxion Trader Sentiment Survey Shows Rising Interest in Leveraged ETFs as Active Traders Embrace AI and Tech Innovation
NEW YORK, November 29, 2023 – Direxion, a leading provider of tradeable and thematic exchange-traded funds (ETFs), today announces the results of their second annual Direxion Trader Sentiment Survey, conducted by the Harris Poll, recognizing the unique needs and motivations of active traders in the current market environment.
The survey data indicates that active traders are seeking enhanced returns, control, and opportunities in technology and artificial intelligence (AI) as they continue to evolve their strategies and adapt to market conditions. Highlights include:
- 50% of active traders reported holding ETFs in their portfolios in 2023, showing consistency with the previous year's figure of 49%.
- 1 in 5 active traders (23%) hold ten or more ETFs, with 42% increasing their ETF allocation over the past year. These traders have adopted more aggressive ETF trading strategies, in hopes of maximizing returns.
- A subset of active traders has embraced leveraged ETFs, further diversifying their portfolios. These leveraged instruments attract 15% of active traders, offering the potential to take advantage of the bull market and use leveraged ETFs to magnify their exposure to seek to outperform it.
The Generational Distinction in Active Trading
Younger generations who are active traders, including Gen Z/Millennials, see substantial value in ETFs, particularly those tracking non-traditional asset classes, with 52% finding them very valuable for their investment goals, compared to 36% of Gen X. However, results showed that similar proportions of Gen Z/Millennials and Gen X hold ETFs in their portfolio (52% vs. 54%) despite differences in value seen in the products.
"Across generations, traders are showcasing active interest and control in their investment decisions,” said Direxion Chief Marketing Officer Andy O’Rourke. “They not only understand leveraged & inverse ETFs, but also see the value of diversification through non-traditional trading vehicles. At Direxion, we're committed to supporting traders of all generations on their journey to informed decision-making, ensuring they have the educational tools and materials they need to succeed."
Traits of Active Traders in a Steady Market
Active traders who are knowledgeable about ETFs exhibit a strong commitment to them by holding five or more of the instruments in their portfolios. They believe ETFs provide the flexibility to allow them to directly control their investment decisions in the short term, highlighting the importance of knowledge and engagement in active trading.
Additionally, at the time of the survey active traders continued their quest for short-term trading opportunities in the low volatility, steady bull market environment. Their priorities emphasize the pursuit of potential income and excess returns, selected by 48% of active traders as the most common factor when considering investment options.
One distinguishing factor of active traders is their desire for control and the belief that they can affect positive outcomes through their active trading. A majority (59%) perceive benefits in being active traders due to their ability to make timely decisions, and 54% capitalize on their personal knowledge to take advantage of short-term market movements.
The Active Trader Outlook on Technology and AI
Active traders are at the forefront of adopting innovative technologies. They express a keen interest in Technology (61%) and AI and Robotics (45%) as ETF sectors or industries that will provide the most value in the next 12 months. These traders not only invest in AI but also aim to harness it to inform their trading decisions with 60% of active traders currently using or have used AI/robo-advisors in their investment planning, strategy, or execution, and 71% plan to start to increase their use of AI/robo-advisor tools in the next two years. This signals a strong willingness to incorporate this technology into their investing strategies.
Their preference for the technology sector remains consistent, with 57% in 2023 compared to 56% in 2022. “Over the past year, active traders have increasingly turned their attention to the AI and Technology markets, understanding the transformative potential that these industries offer.” Shared Ed Egilinsky, Managing Director at Direxion. ”For the first three quarters of 2023, the dollar value trading in our four flagship technology related leveraged & inverse ETFs (TECL, TECS, SOXL, SOXS) represented over a third (36%) of the overall value traded in the entire suite of funds.”
The research was conducted online in the U.S. by The Harris Poll on behalf of Direxion among 500 U.S. Adults aged 18 years or older, with at least $25,000 in investable assets. The survey was conducted from 19th July to 7th August, 2023. Data are weighted where necessary by age, gender, race/ethnicity, region, education, marital status, household size, employment, household income, investable assets, and propensity to be online to bring them in line with their actual proportions in the population. Respondents for this survey were selected from among those who have agreed to participate in our surveys. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within + 5.55 percentage points using a 95% confidence level. This credible interval will be wider among subsets of the surveyed population of interest. All sample surveys and polls, whether or not they use probability sampling, are subject to other multiple sources of error which are most often not possible to quantify or estimate, including, but not limited to coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments.
Direxion equips investors who are driven by conviction with ETF solutions built for purpose and fine-tuned for precision. These solutions are available for a broad spectrum of investors, whether executing short-term tactical trades, or investing in thematic strategies. Direxion’s reputation is founded on developing products that precisely express market perspectives and allow investors to manage their risk exposure. Founded in 1997, the company has approximately $29 billion in assets under management as of September 30, 2023. For more information, please visit www.direxion.com.
There is no guarantee that the Funds will achieve their investment objectives.
Leveraged and Inverse ETFs pursue daily leveraged investment objectives, which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk and who actively manage their investments.
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Direxion Shares ETF Risks - An investment in the ETFs involves risk, including the possible loss of principal. The ETFs are non-diversified and include risks associated with concentration that results from an ETF’s investments in a particular industry, sector or company, which can increase volatility. The leveraged and inverse ETF utilize derivatives, such as futures contracts and swaps which are subject to market risks that may cause their price to fluctuate over time. The leveraged and inverse ETFs do not attempt to, and should not be expected to, provide returns which are a multiple of the return of their respective index or underlying security for periods other than a single day. The leveraged and inverse ETFs may also subject to leverage, correlation, daily compounding, market volatility and risks specific to an industry, sector or company. The non-leveraged ETFs are subject to certain risks, including imperfect index correlation and market price variance, which may decrease performance. The non-leveraged ETFs may invest in a relatively small number of issuers and, as a result, be subject to greater risk of loss with respect to its portfolio securities. The non-leveraged ETFs may experience greater fluctuation in its net asset value as compared to other investments. The nonleveraged ETFs may be appropriate for investors with a long-term investment time horizon, who primarily seek capital growth, and who are able to tolerate periods of prolonged price declines. Please read each ETF’s prospectus for a more complete description of the investment risks.
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