Robinhood's Favorite ETFs

June 10, 2020

(Editor's Note: A previous version of this story omitted UCO from the lineup of most popular ETFs. We regret the error.)

Who owns which ETF? It's a question we're always asking here at ETF.com, even if our answers usually end up halfway between speculation and educated guess. Trade data is inherently anonymous; an ETF's flows data can't reveal which investor made a particularly big trade, only that a large creation or redemption was made.

There do exist some ways to peek into what's inside investors' portfolios, however. For example, large investors must file the 13F form, a quarterly portfolio disclosure that any investor with more than $100 million in assets must file. 13Fs offer a wealth of insight into the thought processes of star managers, and we even used to regularly cover 13F filings at ETF.com, back in the days when institutional investors were the main user base of ETFs. 

Of course, smaller investors aren't required to file 13Fs. But there's a much easier way to track what they own: Robinhood trade data.

What Is Robinhood?
Robinhood is a commission-free trading platform that allows users to trade stocks, ETFs, options, even cryptocurrency. With no account minimums or sign-up fees, it now boasts 13 million user accounts, most of which are owned by self-directed individual investors. (Compare that to TD Ameritrade, which has roughly 11 million accounts; or E*Trade, which has just over 5 million.)

Robinhood also makes limited trade data publicly accessible; user identities are protected, but the price and popularity of each security is documented in its API.

External data tracker Robintrack—created by software developers Casey Primozic and Alex J—collates this information into free, easily accessible charts; these can be used to keep a finger on the pulse of what Robinhood users are trading. Using Robintrack, one can spot big trades up to the minute, and identify investment trends as they emerge. (Robintrack is not affiliated with Robinhood.)

On June 4, we pulled Robinhood's top 20 most popular ETFs, listed in the table below, and were able to identify a few investment trends of our own:

The 20 Most Popular ETFs On Robinhood
Ticker Fund Expense Ratio AUM ($M) YTD flows ($M) Robinhood Popularity Rank # of Holders
USO  United States Oil Fund LP 0.79% 4,950.00 6,530.08 41 171,789
UCO  ProShares Ultra Bloomberg Crude Oil ETF 0.95% 1,600 2,844 45 143,150
VOO  Vanguard S&P 500 ETF 0.03% 141,020.00 15,941.00 56 110,494
GUSH  Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares 1.17% 379.42 424.89 58 109,594
SPY  SPDR S&P 500 ETF Trust 0.09% 269,600.00 -26,248.95 66 95,671
SPHD  Invesco S&P 500 High Dividend Low Volatility ETF 0.30% 2,590.00 -316.55 87 74,993
VTI  Vanguard Total Stock Market ETF 0.03% 142,050.00 10,162.92 111 60,033
MJ  ETFMG Alternative Harvest ETF 0.75% 589.58 22.19 140 45,397
JNUG  Direxion Daily Junior Gold Miners Index Bull 2X Shares 1.12% 660.80 240.92 145 43,046
VYM  Vanguard High Dividend Yield ETF 0.06% 26,260.00 145.12 158 38,841
JETS  US Global Jets ETF 0.60% 1,040.00 946.70 192 32,230
QQQ  Invesco QQQ Trust 0.20% 109,120.00 10,405.69 198 31,201
UGAZ  VelocityShares 3X Long Natural Gas ETN 1.65% 521.67 566.42 231 26,989
JDST  Direxion Daily Junior Gold Miners Index Bear 2X Shares 1.10% 75.59 -11.90 235 26,319
SPYD  SPDR Portfolio S&P 500 High Dividend ETF 0.07% 1,870.00 336.73 240 25,828
BOTZ  Global X Robotics & Artificial Intelligence ETF 0.68% 1,470.00 -94.39 246 24,994
TQQQ  ProShares UltraPro QQQ 0.95% 5,970.00 1,545.17 270 22,252
TVIX  VelocityShares Daily 2x VIX Short-Term ETN 1.65% 1,040.00 -1,492.27 271 22,104
SPXL  Direxion Daily S&P 500 Bull 3X Shares 1.01% 1,520.00 606.64 273 21,755
GLD  SPDR Gold Trust 0.40% 63,460.00 12,925.32 275 21,697
DFEN  Direxion Daily Aerospace & Defense Bull 3X Shares 0.99% 160.36 124.40 282 20,878

Sources: Robintrack, ETF.com; data as of June 4, 2020

Robinhood Traders Love A Good Story
Perhaps to nobody's surprise, Robinhood users are big fans of thematic ETFs. In fact, the most popular ETF on the platform is the United States Oil Fund LP (USO), with over 171,000 shareholders.

So far, oil—and USO in particular—has been the stand-out thematic story of 2020, with energy demand and oil prices cratering due to the worldwide pandemic. Investors looking to position themselves for an eventual rebound in oil prices have poured into USO, with billions of new investment cash entering the fund year to date even as its managers have dramatically change its portfolio structure. (Read: "More Big Changes For Biggest Oil ETF.")

But oil isn't the only COVID-related rebound Robinhood investors are looking to play. Airline stocks have also plunged due to the pandemic, and more than 32,000 Robinhood users have seized the opportunity to buy the US Global JETS ETF (JETS), positioning themselves for a potential rebound in the sector. (Read: "Fastest Growing ETFs Of The Year.")

Gold is another favorite pandemic play of Robinhood users—particularly the SPDR Gold Trust (GLD), with about 22,000 users. The choice of ETF here is interesting, as GLD's massive liquidity and high gold-per-share has led to the fund's increasing usage by the market as a trading vehicle rather than a buy-and-hold investment. (Read: "ETF Of The Week: 'Mini Gold' Matters.")

Outside of the context of COVID-19, cannabis remains a popular theme with Robinhood users, via the ETFMG Alternative Harvest ETF (MJ), as does artificial intelligence, via the Global X Robotics & Artificial Intelligence ETF (BOTZ). Defense stocks, too, are climbing in popularity, via the Direxion Daily Aerospace & Defense Bull 3X Shares (DFEN).

Same Song, This Time With Leverage
You have to hand it to Robinhood investors: When they choose a theme, they really commit. Despite most experts agreeing that retail investors should trade leveraged and inverse ETFs with extreme caution, leveraged long thematic funds rank among the most popular funds on the platform—and Robinhood investors may account for a significant chunk of these ETFs' total asset base.

For example, energy plays like theProShares Ultra Bloomberg Crude Oil ETF (UCO), the Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (GUSH) and the VelocityShares 3X Long Natural Gas ETN (UGAZ) have found favor with Robinhood users looking to position themselves for rising energy prices.

In particular, GUSH is the third most popular ETF on Robinhood, with 110,000 shareholders. Recent survey data has shown that Robinhood's average account size is between $1,000 and $5,000, so if we assume an average account size of $2,500, that would mean an estimated 72% of GUSH's AUM could be attributable to Robinhood investors. (This is just a back-of-the-envelope exercise, however, and not meant to indicate the actual proportion of GUSH's investor base that comes from Robinhood.)

Equity gold plays have also garnered interest, including the Direxion Daily Junior Gold Miners Index Bull 2X Shares (JNUG) and the Direxion Daily Junior Gold Miners Index Bear 2X Shares (JDST). In this case, however, shareholders are piling into both sides of the gold trade, bull and bear. Again, using our back-of-the-envelope estimate based on a theoretical account size of $2,500, 16% of JNUG's assets and 87% of JDST's assets could be attributed to Robinhood investors.

But it isn't just thematic leveraged plays drawing attention. Those looking to bet on a generalized market rebound have piled into leveraged large cap ETFs, like the Direxion Daily S&P 500 Bull 3X Shares (SPXL) and the ProShares UltraPro QQQ (TQQQ). Even leveraged exposure to volatility has attracted traders, via the VelocityShares Daily 2X VIX Short-Term ETN (TVIX).

Robinhood Traders Need Boring Funds, Too
For all the interest in thematic ETFs, however, many Robinhood traders are looking to build a broad U.S. equity allocation, too.

The Vanguard S&P 500 ETF (VOO), the SPDR S&P 500 ETF Trust (SPY) and the Vanguard Total Stock Market ETF (VTI) are the second, fourth and sixth most popular ETFs on Robinhood, respectively, with 110,000 shareholders, 96,000 shareholders and 60,000 shareholders.

The Invesco QQQ Trust (QQQ), an ETF commonly used as a proxy for large cap tech stocks, isn't too far behind, with 31,000 shareholders.

Each of these are broad-based, U.S. equity index ETFs typically used in a diversified asset allocation strategy, often for buy-and-hold investors.

In addition, several dividend funds are counted among the most popular ETFs on the platform, suggesting a desire among Robinhood users for steady income.

Popular dividend ETFs include the Invesco S&P 500 High Dividend Low Volatility ETF (SPHD), the Vanguard High Dividend Yield ETF (VYM) and the SPDR Portfolio S&P 500 High Dividend ETF (SPYD), which count 75,000 shareholders, 39,000 shareholders and 26,000 shareholders, respectively.

More Education Needed About Nonequity ETFs
Yes, it's dangerous to draw too many conclusions from the aggregate trading data from a single trading platform for a single day. I'm going to do it anyway.

If we take Robinhood's user base as a proxy for the retail market as a whole, then this data seems to suggest what good financial advisors already know—that retail investors are drawn to a good story, but still want diversification and the preservation of income.

But the lack of ownership of internationally focused ETFs, fixed income ETFs and other asset classes among Robinhood users also suggests that more could be done to educate retail or self-directed investors about their options, helping them better position their portfolios for retirement or whatever financial goals lay ahead.

Contact Lara Crigger at [email protected]

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