ETF Trader: New Charles Schwab Survey Finds Active Traders Turning Slightly More Neutral

Charles Schwab today released new data showing that active traders are turning more neutral about the stock market and are taking steps to better manage perceived volatility and risk. The latest Charles Schwab Active Trader Sentiment Survey polled more than 500 individual investors who trade frequently. Key findings include:

“We find that people are paying much more attention to proper asset allocation and are also considering a variety of ways to better navigate the market and achieve their ultimate financial objectives.”

  • 28 percent expressed a bullish outlook for the market in the next six months, down from 50 percent in the last survey published in December 2009.
  • Roughly half (51 percent) are neutral and 21 percent are bearish in the new survey compared with 35 percent neutral and 14 percent bearish in December 2009.
  • 43 percent of those surveyed said they recently changed their portfolio allocation to include more cash, 21 percent reduced their cash holdings while 37 percent made no change in the past three months.

“Given recent fluctuations in the financial markets, investors are staying close to developments that might impact their trading strategies,” noted Kelli Keough, vice president of active trading. “We find that people are paying much more attention to proper asset allocation and are also considering a variety of ways to better navigate the market and achieve their ultimate financial objectives.”

Traders Focused On Portfolio Protection

The latest Schwab survey also finds that active traders are taking steps to hedge their portfolios against risk. For example, 40 percent of those surveyed report they are trading options. An overwhelming majority (74 percent) of those who trade options say they are doing so primarily for potential income generation or risk management as opposed to pure speculation.

Active traders also continue to embrace the use of exchange traded funds (ETFs), which can be an easy, cost-effective way to gain exposure to sector, industry or market trends while helping reduce the company-specific risks associated with buying individual stocks.

54 percent of those surveyed say they trade ETFs, virtually unchanged from the December survey. Of those who trade ETFs, half (50 percent) are primarily using sector or specialty ETFs, 38 percent are primarily using index ETFs and only 12 percent are favoring exotic or leveraged ETF products.

Trends, Indicators & Sectors Worth Watching

According to the survey, traders are currently watching several indicators to help determine their sentiment. These influencing factors include overall stock market performance (49 percent), policy decisions out of Washington (22 percent), the U.S. unemployment rate (15 percent), interest rates (10 percent) and real estate prices (5 percent).

Other key survey findings include:

  • Traders are most bullish on the technology sector (36 percent), distantly followed by financials and materials (14 percent each).
  • Financials saw the biggest drop-off in bullish sentiment of any sector (14 percent now vs. 29 percent in December 2009).
  • Echoing a trend reported in the December 2009 survey, traders continue to show a bias toward the U.S. market. 58 percent say domestic equities are most attractive right now, followed by Emerging Markets (21 percent, Asia (18 percent) and Europe (just 2 percent).

For More Information

Charles Schwab provides active traders with several trading platforms, free seminars and workshops, online education resources and 24-hour access to experienced trading specialists. For more information, please visit or call 888-245-6864.

Survey Methodology

Survey data was derived from responses of 535 active traders and investors collected in February 2010. The data was analyzed by Directive Analytics and has a statistical accuracy at 95 percent confidence level.

Some specialized exchange-traded funds can be subject to additional market risks. Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost.

Investors should carefully consider information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by calling Schwab at 800-435-4000. Please read the prospectus carefully before investing.

Investments in foreign assets may incur greater risks than domestic investments. Investing in emerging markets may accentuate these risks.

Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Please read the Options Disclosure Document titled “Characteristics and Risks of Standardized Options” before considering any option transaction. Call Schwab at 1-800-435-4000 for a current copy.

Supporting documentation for any claims or statistical information is available upon request.

About Charles Schwab

The Charles Schwab Corporation (NYSE:SCHW) is a leading provider of financial services, with more than 300 offices and 7.8 million client brokerage accounts, 1.5 million corporate retirement plan participants, 768,000 banking accounts, and $1.49 trillion in client assets. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Named “Highest in Investor Satisfaction with Self-Directed Services” by J.D. Power and Associates in 2009, its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC,, and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and mortgage services and products. More information is available at (0410-2195)


Charles Schwab
Lara Edge, 415-667-0588
[email protected]
Intermarket Communications
Neil Shapiro, 212-754-5423
[email protected]

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