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2022-10-21

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Investors Jump Into Risky ETFs to Supersize Bets Amid Market Turmoil

Investors are plowing record amounts of cash into risky funds that turbocharge investment bets durin

Investors Jump Into Risky ETFs to Supersize Bets Amid Market Turmoil

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来人
·2022-10-21
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·2022-10-21
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This is already above 2008’s record haul of $17 billion.</p><p>Inverse and leveraged ETFs are complex vehicles typically meant for short-term trades. Inverse funds seek to provide the opposite movement of an underlying index, asset or derivative. Some, for example, move inversely to the Nasdaq-100 index, allowing investors to wager the technology benchmark will lose ground.</p><p>Inverse funds also often use leverage, or borrowed money, as do leveraged funds. This can magnify an investment’s return, although leverage can also amplify losses. Depending on the amount of leverage, such funds seek to boost daily returns by up to three times.</p><p>To be sure, this is a niche area of the ETF market. And most investors are searching for places to hide from the market storm prompted byFederal Reserve interest-rate rises, fears ofglobal recession, war in Ukraine and an energy crunch.</p><p><img src=\"https://static.tigerbbs.com/21a0d1999709169e416d8b8bc4f93a14\" tg-width=\"654\" tg-height=\"462\" width=\"100%\" height=\"auto\"/></p><p>Government-bond funds, for example, have taken in more than $112 billion in 2022, more than double the previous annual record of $51 billion in 2018, according to Strategas Research ETF strategist Todd Sohn.</p><p>Still, the contrarian inflow into inverse and leveraged funds represents 6.1% of the net $403 billion added to exchange-traded funds this year, according to Morningstar Direct. In 2021, such flows accounted for less than 1% of overall ETF additions and 2.9% in 2020.</p><p>And while these products are inherently risky, some investors say they offer a chance to hedge against further big market moves.</p><p>Carter Randolph, chairman of investment-advisory firm The Randolph Company, said he uses the products to diminish volatility in his portfolio. He said inverse ETFs allow him to reduce his equity exposure without incurring taxes by selling some of his stockholdings.</p><p>“We have used the [inverse and leveraged] products a lot more this year than in the past,” said Mr. Randolph, whose firm manages roughly $800 million in assets, primarily for families and foundations. He added that one inverse, leveraged Nasdaq fund represents a little less than 5% of his portfolio, a position the firm has maintained for months.</p><p>Individual investors—whose speculative fervor made headlines duringthe meme-stock maniain early 2021—are also embracing such funds. Five of the 10 most popular funds among individual investors this year are leveraged, according to Vanda Research’s VandaTrack, which monitors trading activity among individual investors. Meanwhile, only one bond fund managed to crack the top 10.</p><p><img src=\"https://static.tigerbbs.com/d28857259165e7c2d82ca5d3a75c0a1d\" tg-width=\"655\" tg-height=\"455\" width=\"100%\" height=\"auto\"/></p><p>Two of the most popular funds among individual investors this yearhave been triple-leveraged wagersfrom ProShares on the daily returns of the Nasdaq-100—one betting on the index and the other against it.</p><p>And those funds underscore the risk inherent in these products. The ETF offering three times the daily return of the Nasdaq-100 index is down around 77% this year versus an around 32% loss for the index. The fund that offers a leveraged bet on a decline of the index is up nearly 96% this year—but is down nearly 100% since its 2010 inception.</p><p>Part of the reason such products are so volatile is that they seek a return of multiple times the performance of an underlying benchmark for just one day. As ProShares says on its website, “Due to the compounding of daily returns, holding period of greater than one day can result in returns that are significantly different than the target return.”</p><p>Nevertheless, demand from investors has encouraged issuers to bring more of these products to market. The latest trend?Single-stock ETFs, offering easy access to leverage and short strategies on shares of individual companies such asTeslaInc.,NvidiaCorp. andPayPal HoldingsInc.</p><p>“There’s a number of new issuers breaking into the ETF space…and single-stock products are the newest thing,” said Ed Baer, a counsel in Ropes &amp; Gray’s asset management group who advises ETFs. “The gamification of stock trading in certain names could be part of what’s fueling the emergence of ETFs tied to them.”</p><p></p></body></html>","source":"wsj_highlight","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Investors Jump Into Risky ETFs to Supersize Bets Amid Market Turmoil</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nInvestors Jump Into Risky ETFs to Supersize Bets Amid Market Turmoil\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-10-21 21:09 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.wsj.com/articles/investors-jump-into-risky-etfs-to-supersize-bets-amid-market-turmoil-11666357337?mod=rss_markets_main><strong>the wall street journal</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Investors are plowing record amounts of cash into risky funds that turbocharge investment bets during a market rout thatis roiling stocks and bonds.Nearly $25 billion has flowed into leveraged and ...</p>\n\n<a href=\"https://www.wsj.com/articles/investors-jump-into-risky-etfs-to-supersize-bets-amid-market-turmoil-11666357337?mod=rss_markets_main\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SQQQ":"纳指三倍做空ETF","TQQQ":"纳指三倍做多ETF"},"source_url":"https://www.wsj.com/articles/investors-jump-into-risky-etfs-to-supersize-bets-amid-market-turmoil-11666357337?mod=rss_markets_main","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1136675475","content_text":"Investors are plowing record amounts of cash into risky funds that turbocharge investment bets during a market rout thatis roiling stocks and bonds.Nearly $25 billion has flowed into leveraged and inverse exchange-traded funds this year, according to Morningstar Direct. This is already above 2008’s record haul of $17 billion.Inverse and leveraged ETFs are complex vehicles typically meant for short-term trades. Inverse funds seek to provide the opposite movement of an underlying index, asset or derivative. Some, for example, move inversely to the Nasdaq-100 index, allowing investors to wager the technology benchmark will lose ground.Inverse funds also often use leverage, or borrowed money, as do leveraged funds. This can magnify an investment’s return, although leverage can also amplify losses. Depending on the amount of leverage, such funds seek to boost daily returns by up to three times.To be sure, this is a niche area of the ETF market. And most investors are searching for places to hide from the market storm prompted byFederal Reserve interest-rate rises, fears ofglobal recession, war in Ukraine and an energy crunch.Government-bond funds, for example, have taken in more than $112 billion in 2022, more than double the previous annual record of $51 billion in 2018, according to Strategas Research ETF strategist Todd Sohn.Still, the contrarian inflow into inverse and leveraged funds represents 6.1% of the net $403 billion added to exchange-traded funds this year, according to Morningstar Direct. In 2021, such flows accounted for less than 1% of overall ETF additions and 2.9% in 2020.And while these products are inherently risky, some investors say they offer a chance to hedge against further big market moves.Carter Randolph, chairman of investment-advisory firm The Randolph Company, said he uses the products to diminish volatility in his portfolio. He said inverse ETFs allow him to reduce his equity exposure without incurring taxes by selling some of his stockholdings.“We have used the [inverse and leveraged] products a lot more this year than in the past,” said Mr. Randolph, whose firm manages roughly $800 million in assets, primarily for families and foundations. He added that one inverse, leveraged Nasdaq fund represents a little less than 5% of his portfolio, a position the firm has maintained for months.Individual investors—whose speculative fervor made headlines duringthe meme-stock maniain early 2021—are also embracing such funds. Five of the 10 most popular funds among individual investors this year are leveraged, according to Vanda Research’s VandaTrack, which monitors trading activity among individual investors. Meanwhile, only one bond fund managed to crack the top 10.Two of the most popular funds among individual investors this yearhave been triple-leveraged wagersfrom ProShares on the daily returns of the Nasdaq-100—one betting on the index and the other against it.And those funds underscore the risk inherent in these products. The ETF offering three times the daily return of the Nasdaq-100 index is down around 77% this year versus an around 32% loss for the index. The fund that offers a leveraged bet on a decline of the index is up nearly 96% this year—but is down nearly 100% since its 2010 inception.Part of the reason such products are so volatile is that they seek a return of multiple times the performance of an underlying benchmark for just one day. As ProShares says on its website, “Due to the compounding of daily returns, holding period of greater than one day can result in returns that are significantly different than the target return.”Nevertheless, demand from investors has encouraged issuers to bring more of these products to market. The latest trend?Single-stock ETFs, offering easy access to leverage and short strategies on shares of individual companies such asTeslaInc.,NvidiaCorp. andPayPal HoldingsInc.“There’s a number of new issuers breaking into the ETF space…and single-stock products are the newest thing,” said Ed Baer, a counsel in Ropes & Gray’s asset management group who advises ETFs. “The gamification of stock trading in certain names could be part of what’s fueling the emergence of ETFs tied to them.”","news_type":1},"isVote":1,"tweetType":1,"viewCount":487,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":4,"xxTargetLangEnum":"ORIG"},"commentList":[{"id":104450865,"commentId":"104450865","gmtCreate":1666362132956,"gmtModify":1666362136637,"authorId":3575544575320394,"author":{"id":3575544575320394,"idStr":"3575544575320394","authorId":3575544575320394,"name":"来人","avatar":"https://static.tigerbbs.com/0af89587decbb8a1d3e1596adc29cb98","vip":1,"crmLevel":6,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9981047691,"objectIdStr":"9981047691","type":1,"supId":0,"supIdStr":"0","prevId":0,"prevIdStr":"0","content":"<u>Yes</u>","text":"<u>Yes</u>","html":"<u>Yes</u>","likeSize":0,"commentSize":0,"subComments":[],"verified":10,"allocateAmount":0,"commentType":"invalid","coins":0,"score":0},{"id":104450229,"commentId":"104450229","gmtCreate":1666359270025,"gmtModify":1666359273899,"authorId":3576295472948618,"author":{"id":3576295472948618,"idStr":"3576295472948618","authorId":3576295472948618,"name":"RChia","avatar":"https://static.tigerbbs.com/cea89db323c5328650526772cf80ec19","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9981047691,"objectIdStr":"9981047691","type":1,"supId":0,"supIdStr":"0","prevId":0,"prevIdStr":"0","content":"like","text":"like","html":"like","likeSize":0,"commentSize":0,"subComments":[],"verified":10,"allocateAmount":0,"commentType":"invalid","coins":0,"score":0}],"hasMoreComment":true,"orderType":2}