Search

Single-Stock ETFs

Leveraged and inverse ETFs have been available for years, with most tracking broad-market indexes, commodities, thematic themes, and sectors.


Single-stock funds have also been available outside the U.S. market, specifically in Europe. A new class of ETFs, single-stock ETFs, allows investors to participate in single stocks with leveraged bullish or bearish bets.


Single-stocks ETFs tend to be more volatile than index-based ETFs and may appeal to aggressive shorter-term investors and traders who can tolerate risks.


The new ETFs will rebalance daily by tracking the underlying asset’s performances for a single day. Investors looking to hold for the long-term may be disappointed since the returns can deviate widely in highly volatile market conditions.


Nonetheless, the appetite for single-stock ETFs has grown to the point that three financial companies have recently launched competing products.


Last month, AXS Investments released eight (8) ETFs, allowing traders and investors to buy or sell popular underlining stocks through derivatives such as options and futures.


The ETFs include AXS TSLA Bear Daily ETF (TSLQ), AXS 1.25X NVDA Bear Daily ETF (NVDS), AXS 1.5X PYPL Bear Daily ETF (Nasdaq: PYPS), AXS 1.5X PYPL Bull Daily ETF (Nasdaq: PYPT), AXS 2X NKE Bear Daily ETF (NKEQ), AXS 2X NKE Bull Daily ETF (NKEL), AXS 2X PFE Bear Daily ETF (PFES), and AXS 2X PFE Bull Daily ETF (Nasdaq: PFEL).


This past week, Direxion also launched four (4) single-stock ETFs, including Daily AAPL Bear 1X Shares (AAPD), Daily AAPL Bull 1.5X Shares (AAPU), Daily TSLA Bear 1X Shares (TSLS), and Daily TSLA Bull 1.5X Shares (TSLL).


Not to be outdone, Granite Shares also debuted (4) single-stock ETFs in the same week. GraniteShares 1.25x Long TSLA Daily ETF (TSL), GraniteShares 1x Short TSLA Daily ETF (TSLI), GraniteShares 1.75x Long AAPL Daily ETF (AAPB), and GraniteShares 1.5x Long COIN Daily ETF (CONL).


With the release of the new single-stock ETFs, investors with high convictions in stocks can now make bullish or bearish bets without having to open a margin account or trade directly in derivatives.


The advantage for investors is that they cannot lose more than their initial investment. The downside of this product is that they remain leveraged funds and the fees tend to be high, exceeding 1%, while most index-tracking ETFs have fees of less than 0.1%.


For experienced and disciplined investors, the single-stock ETFs can be an excellent product to hedge against concentrated long stock positions in front of price-moving events such as earnings reports.


In the hands of amateur or newbies, single-stock ETFs can also increase risk-taking behavior resulting in speculative leveraged trades.


Source: Chart courtesy of StockCharts.com

Source: Chart courtesy of StockCharts.com

Source: Chart courtesy of StockCharts.com

Source: Chart courtesy of StockCharts.com

37 views0 comments

Recent Posts

See All

Technical Summary Equities – SPX nears pivotal intermediate-term resistance at 4,105-4,219 or the top of the Jan/Mar 2022 downtrends, Jun, and Sept 2022 highs, the 50% retracement from the Jan-Oct 202