Single-Stock Funds Are Taking Off. What You Need to Know

Barrons2022-08-11

Exchange-traded funds gained dominance in recent decades as they allowed investors to trade thousands of stocks at the same time, and at a low cost. Now, a new breed of ETFs allows investors to make ...

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YnWa
2022-08-11
YnWa
I see
DailyTrader7
2022-08-11
DailyTrader7
Likey likey
HawTK
2022-08-11
HawTK
Like and comment please
Stanlon
2022-08-11
Stanlon
Like
Nebhol
2022-08-11
Nebhol
Ok
Avenite
2022-08-11
Avenite
Ok

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What You Need to Know\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-08-11 15:21 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.barrons.com/articles/single-stock-funds-are-taking-off-51660172190?mod=hp_LATEST><strong>Barrons</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Exchange-traded funds gained dominance in recent decades as they allowed investors to trade thousands of stocks at the same time, and at a low cost. Now, a new breed of ETFs allows investors to make ...</p>\n\n<a href=\"https://www.barrons.com/articles/single-stock-funds-are-taking-off-51660172190?mod=hp_LATEST\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":".DJI","symbol_name":"道琼斯","start_time":0,"source_url":"https://www.barrons.com/articles/single-stock-funds-are-taking-off-51660172190?mod=hp_LATEST","article_id":"2258505270","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2258505270","pubTimestamp":1660202513,"sourceInfo":{"source_id":"lsy1601382232898","name":"Barrons"},"weMediaInfo":null,"summary":"Exchange-traded funds gained dominance in recent decades as they allowed investors to trade thousand","collect":0,"end_time":0,"defaultTopTitle":"barrons.com","property":[],"viewcount":null,"language":"en","relate_stocks":{".DJI":"道琼斯","CRM":"赛富时","TSLQ":"Tradr 2X Short TSLA Daily ETF","COIN":"Coinbase Global, Inc.","PFE":"辉瑞","WFC":"富国银行","TSLH":"Innovator Hedged TSLA Strategy ETF",".IXIC":"NASDAQ Composite","NKE":"耐克","COP":"康菲石油","AAPL":"苹果","BA":"波音",".SPX":"S&P 500 Index","TSLL":"Direxion Daily TSLA Bull 2X Shares","NVDA":"英伟达","PYPL":"PayPal"},"translate_title":"单只股票型基金正在起飞。你需要知道的","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{".DJI":1,".IXIC":1,".SPX":1,"AAPL":1,"BA":1,"COIN":1,"COP":1,"CRM":1,"NKE":1,"NVDA":1,"PFE":1,"PYPL":1,"TSLH":1,"TSLL":1,"TSLQ":1,"WFC":1},"content_text":"Exchange-traded funds gained dominance in recent decades as they allowed investors to trade thousands of stocks at the same time, and at a low cost. Now, a new breed of ETFs allows investors to make outsize bets -- bullish or bearish -- on single stock names.These new products, with risks significantly greater than those of conventional funds, are sending a sign that the appetite for speculation is on the rise.Last month, AXS Investments launched eight ETFs that allow investors to bet on, or against, a single stock using derivatives such as options and futures -- in some cases, amplifying gains or losses with leverage. Stocks underlying the funds include Tesla (ticker: TSLA), Pfizer (PFE), Nvidia (NVDA), PayPal Holdings (PYPL), and Nike (NKE). This past week, Direxion and GraniteShares each debuted four single-stock ETFs, covering Tesla, Apple (AAPL), and Coinbase Global (COIN).The AXS TSLA Bear Daily ETF (TSLQ), for example, returns the inverse of Tesla shares' daily performance, while the Direxion Daily TSLA Bull 1.5X ETF (TSLL) aims to deliver 1.5 times Tesla's daily returns.In the past, investors who wanted to make bearish or outsize bets on a stock had to open a margin account and learn how to trade derivatives. Now, they can simply buy the ETFs through regular brokerage accounts alongside other investments. The convenient access is a major advantage -- plus, they're a little safer: Investors can't lose more than their initial investment, as they can in a margin account.But the downsides are pretty obvious, too. Inverse and leveraged funds often come with hefty fees. The single-stock ETFs from AXS and GraniteShares charge an expense ratio of 1.15%, while the Direxion funds carry a fee of 0.95%. Most index-tracking ETFs have fees of less than 0.1%.Inverse and leveraged ETFs aren't suitable for investors with a long-term view. The funds rebalance daily, since they seek only to track the underlying asset's performances for one day. That means investors holding over a longer period might see returns significantly deviate from what they'd expect, especially in volatile markets.\"These products are best suited for investors who have a stomach for volatility and trade on very short horizons,\" says Todd Rosenbluth, head of research at ETF data and analytics firm VettaFi. \"The longer you own, the greater the potential risks you face.\"Leveraged and inverse funds aren't new concepts, but until recently, they have mostly tracked broad-market indexes, since single stocks are usually more volatile and could bring unwanted risks for investors who don't know what they're getting into.Tesla stock, for example, had swung up more than 100% and then lost all those gains in a year's time. Betting against the stock, even in an ETF, could have led to a total wipeout of the investment. The AXS TSLA Bear Daily ETF has lost a fifth of its value since its launch, as Tesla shares gained 24% during the period.Single-stock funds have been available in Europe for years, and the U.S. market is now mature enough to embrace them, as well, AXS Investments CEO Greg Bassuk tells Barron's.\"We are allowing traders to express their high-conviction views in single companies rather than a broader basket,\" he says, adding that the funds are suitable only for those with the \"ability and financial knowledge to actively trade their portfolios on a daily basis.\"In the hands of experienced and capable traders, derivatives can be used to profit from price-moving events such as earnings reports. The problem is, the ETF structure has opened the gate to everybody. At a time of an uncertain economic outlook and bleak market returns, single-stock ETFs could entice amateur investors into risky and speculative trades -- much like the \"meme stock\" movement has.\"Investor education around these products will be critical as they are introduced into the market,\" wrote Aniket Ullal, head of CFRA, an investment research company, last month.AXS' TSLA Bear ETF currently has nearly 900,000 shares outstanding, but an average of 1.2 million shares have changed hands daily since its launch. For the fund's size, trading has been much more active than the broad-market inverse funds. \"I worry that these single-stock ETFs pose yet another, perhaps greater, risk for investors and the markets,\" said commissioner Caroline Crenshaw of the Securities and Exchange Commission in a statement last month.Some single-stock ETFs aim to limit investor risks instead of amplifying them. The Innovator Hedged TSLA Strategy ETF (TSLH), which was launched a few weeks ago, uses options to put a floor under Tesla's losses at the expense of limited potential gains. Over the period from July 26 to Sept. 30, for example, no matter how Tesla shares perform, investors are guaranteed to lose less than 10%, but the maximum gains will be capped at 9.3%. The buffer and cap will be reset every quarter.Such trade-offs might be attractive for those who want to build a long-term position in Tesla but also want to limit their risks, says Bruce Bond, CEO of Innovator ETFs.\"Tesla stock is highly valued relative to its peers in the automotive industry,\" he says. \"People are often concerned that as soon as they get in, the stock will see a valuation adjustment and they'll lose a lot of money.\"We'll probably see more varieties of single-stock funds as the fund industry tries to meet investors' increasingly diverse demands. The first targets will be widely held companies that have demonstrated strong trading interest, especially around firm-specific developments, says AXS' Bassuk. Already, the firm has 10 more approved products ready to launch, tracking stocks like ConocoPhillips (COP), Boeing (BA), Wells Fargo (WFC), and Salesforce (CRM).","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9907245367,"gmtCreate":1660204659162,"gmtModify":1703479086507,"author":{"id":"3571405784206357","authorId":"3571405784206357","name":"YnWa","avatar":"https://static.tigerbbs.com/8dedf27751203ac80603a416bd954788","vip":1,"hat":"https://static.tigerbbs.com/646756f1284a5a6480ed02cc4fa7d1d2","crmLevel":6,"crmLevelSwitch":0,"authorIdStr":"3571405784206357","idStr":"3571405784206357"},"htmlText":"I see","listText":"I see","text":"I see","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9907245367","repostId":2258505270,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9907246556,"gmtCreate":1660204360280,"gmtModify":1703479084035,"author":{"id":"4111842224562182","authorId":"4111842224562182","name":"DailyTrader7","avatar":"https://community-static.tradeup.com/news/221e86f826e5d51d2c15d2af518a6f07","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"4111842224562182","idStr":"4111842224562182"},"htmlText":"Likey&nbsp;likey","listText":"Likey&nbsp;likey","text":"Likey likey","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9907246556","repostId":2258505270,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9907246266,"gmtCreate":1660204345657,"gmtModify":1703479083868,"author":{"id":"4087822741232210","authorId":"4087822741232210","name":"HawTK","avatar":"https://static.tigerbbs.com/184dd5a8890335d87b5cc27237101a65","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"4087822741232210","idStr":"4087822741232210"},"htmlText":"Like and comment please&nbsp;","listText":"Like and comment please&nbsp;","text":"Like and comment please","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9907246266","repostId":2258505270,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9907224463,"gmtCreate":1660201835554,"gmtModify":1703479055830,"author":{"id":"4123156192015922","authorId":"4123156192015922","name":"Stanlon","avatar":"https://community-static.tradeup.com/news/77f871ae913bef561e338d827f78dd70","vip":1,"hat":"https://static.tigerbbs.com/b073a07f77dbe6b3bec6b12311fde6bd","crmLevel":2,"crmLevelSwitch":1,"authorIdStr":"4123156192015922","idStr":"4123156192015922"},"htmlText":"Like","listText":"Like","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9907224463","repostId":2258505270,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9907225668,"gmtCreate":1660201742456,"gmtModify":1703479053669,"author":{"id":"3567411499210880","authorId":"3567411499210880","name":"Nebhol","avatar":"https://static.tigerbbs.com/b0bfc2a45b91e41a283614268857b3a5","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"3567411499210880","idStr":"3567411499210880"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9907225668","repostId":2258505270,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9907226166,"gmtCreate":1660201330258,"gmtModify":1703479049956,"author":{"id":"4101299314304390","authorId":"4101299314304390","name":"Avenite","avatar":"https://static.tigerbbs.com/b7cb9f66c2dfcd97ff88a4cdff7fe2ed","vip":1,"crmLevel":5,"crmLevelSwitch":1,"authorIdStr":"4101299314304390","idStr":"4101299314304390"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9907226166","repostId":2258505270,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":70,"commentSize":6,"repostSize":0,"favoriteSize":2,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; 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