First US Single-Stock ETFs Debut
AXS Investments, a California-based asset manager, launched eight ETFs Thursday offering investors leveraged exposure to the daily performance of some of the most actively traded stocks.
The launch makes AXS Investment the first company to launch single-stock ETFs in the U.S. market, with others looking to provide similar offerings.
These funds gain exposure to popular names like NVIDIA, Tesla, Nike, PayPal and Pfizer. The products offer investors the potential for huge gains in the short term.
As leveraged and inverse funds, however, there is also the potential for extreme performance volatility if held over multiple days. AXS has also said these funds are not for buy-and-hold, long-term investors.
“Our goal remains to be the leader in providing investors with access to the tools needed to build portfolios and to trade effectively in today's volatile markets,” said Greg Bassuk, CEO of AXS Investments, in a company statement.
While there’s the potential for huge gains in the short term, there are also major risks. SEC officials have recently been outspoken about the pitfalls of single-stock ETFs.
“They are risky products for investors and potentially for the markets, as well,” SEC Commissioner Caroline Crenshaw said in a statement on Monday.
They’re also not exactly cheap. The AXS TSLA Bear Daily ETF (TSLQ), for example, comes with a 95 basis point fee.
Contact Sean Allocca at sean.allocca@etf.com
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