At the end of November 2025, there was about $160.5 billion invested in leveraged exchange-traded funds and notes (ETFs and ETNs). At that point, fund volumes accounted for approximately 8% of total trading activity on U.S. stock exchanges.
Zoom in on those funds and you’ll see that about 90% of turnover comes from active retail traders. These products have served these traders by democratizing access to institutional-like strategies in products that are readily available.
Direxion specializes in providing leveraged ETFs for traders to magnify short term perspectives, utilize bull and bear funds for both sides of the trade, and trade through rapidly changing markets.
Below, we’ll dive deeper into how active traders utilized leveraged EFTs during recent major market events.
Active Traders And Leveraged Funds During the 2020 COVID Bear Market
If you had to mark the exact moment in history where the current retail investment boom started, it’d likely be here. There were plenty of market dislocations and swings to capitalize on, and retail traders did so via leverage.
Turnover in leveraged ETFs more than quadrupled during the depths of the COVID selloff, and retail traders flipped between bull and bear positions in long and short* funds, moving increasingly into inverse ETFs as stock prices dropped.
Those traders turned bullish at the trough of the selloff, a day when the S&P jumped 9.4%, and traders’ appetites for higher prices were cemented after the benchmark crept within 7% of a record high that July.
You’d think traders would feel emboldened in their positions as prices moved. Turns out the opposite was true. Active retail traders moved out of 3X leveraged funds into lower-leveraged products as the selloff progressed.
Explore Direxion’s leveraged and inverse ETFs.
Active Traders And Leveraged Funds During The 2022 Inflation Crisis
The 2022 bear market was the mirror opposite of what happened in 2020. Stocks dropped in a slow, painful fashion, and in an inflation-ravaged world, few strategies actually worked (except for tangible assets & trend-following trades).
Leveraged fund volumes surged when the selloff began. Retail traders directed their energy toward long trades, essentially fighting the stock market’s drop.
From August to November 2022, retail traders added to their short positions in nearly 70% of days. Even when the stock market bottomed on October 12, 2022, retail traders took about a month to flip their daily flows from short to long. Similar to the COVID drop, retail traders ramped up their bets in other assets as stocks approached their lows.
Active Traders And Leveraged Funds During The 2025 Liberation Day Drop
When the White House announced its “Liberation Day” tariffs in early 2025, the S&P 500 fell 10.8% in two days – a move reminiscent of the COVID selloff days.
Leveraged fund activity looked noticeably different in this market event, largely because the space changed drastically from 2022 to 2025. Single-stock funds started coming online in mid-2022, and the number of available funds had almost doubled from the depths of the 2022 crisis.
Retail traders fought against the market’s decline for almost the entirety of the drop. For 35 straight trading days, traders bought into long funds as the S&P 500 fell 19% – gradually, then suddenly. The first day short positions dominated net flows was on April 9, or the stock market’s best day in years.
This may be the next evolution for these funds – a place to express high-conviction contrarian trades.
Explore Direxion’s single stock ETFs.
Who Are Leveraged Funds Right For?
Leveraged funds may be right for you if:
- You have a view you’d like to express over the next day (or days) on events like earnings, data releases, and news events
- You understand the short-term nature of these products (and the risk of substantial losses over a short period of time)
- You have the time and attention span to manage these positions frequently in response to changing market conditions and performance
Leveraged volumes have grown at a 29% annual pace since 2020 — faster than options* and stock market volumes over the same period.
View Direxion’s daily leveraged ETFs.
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*Short selling: Short-selling is a trading strategy where investors borrow shares and sell them, hoping the stock price will fall.
*Options: In finance, an option is a contract which conveys to its owner, the holder, the right, but not the obligation, to buy or sell a specific quantity of an underlying asset or instrument at a specified strike price on or before a specified date, depending on the style of the option.
An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.
Investing in the funds involves a high degree of risk.
Unlike traditional ETFs, or even other leveraged and/or inverse ETFs, these leveraged and/or inverse single-stock ETFs track the price of a single stock rather than an index, eliminating the benefits of diversification. 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 stock’s performance over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. The Funds will lose money if the underlying stock’s performance is flat, and it is possible that the Bull Fund will lose money even if the underlying stock’s performance increases, and the Bear Fund will lose money even if the underlying stock’s performance decreases, over a period longer than a single day. Investing in the Funds is not equivalent to investing directly in the underlying security.
Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. Each Fund is non-diversified and includes risks associated with a Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning.
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