New ETFs that offer investors the opportunity to be bullish or bearish on individual stocks hit the market this week. The new leveraged and inverse daily ETFs could be the first of many and could take on some of the largest companies in the world.
What Happened: The first eight single stock leveraged and inverse ETFs were launched this week by AXS Investments, a leading asset manager that seeks to provide alternative investments for growth and diversification.
“We are thrilled to be the first firm to bring single-stock leveraged and inverse ETFs to U.S. investors,” AXS Investments CEO Greg Bassuk. “AXS has once again opened new access for investors, namely to express their high-conviction views on some of the most actively traded single stocks, regardless of whether their sentiment is bullish or bearish.”
Here are the first eight single-stock ETFs that offer daily exposure based on a bull or bear case.
Tesla Inc TSLA: AXS TSLA Bear Daily ETF TSLQ
NVIDIA Corp NVDA: AXS 1.25X NVDA Bear Daily ETF NVDS
PayPal PYPL: AXS 1.5X PYPL Bull Daily ETF PYPT, AXS 1.5X PYPL Bear Daily ETF PYPS
Nike Inc NKE: AXS 2X NKE Bull Daily ETF NKEL, AXS 2X NKE Bear Daily ETF NKEQ
Pfizer Inc PFE: AXS 2X PFE Bull Daily ETF PFEL, AXS 2X PFE Bear Daily ETF PFES
The funds seek to return 100% or more of the daily return of the stock, with 1.25X representing 125%, 1.5X representing 150% and 2X representing 200%.
AXS Investments previously filed to launch inverse and leveraged ETFs in February for the names above and several others that have not been listed yet. The filings also included Boeing Co BA, ConocoPhillips COP, Salesforce Inc CRM and Wells Fargo & Co WFC.
An updated filing also shows the named funds of AXS TSLA Bull Daily ETF TSLU and AXS 1.25X NVDA Bull Daily ETF (NASDAQ: NVDB), which are not currently listed.
AXS Investments highlights that the ETFs are riskier due to using leverage and may not be appropriate for every investor. The funds may also be appropriate only for active investors due to the volatility of the stocks.
Why It’s Important: Inverse and leveraged ETFs have grown in popularity with investors being able to take advantage of being bullish or bearish on certain sectors or countries.
AXS Investments previously launched the AXS 2X Innovation ETF TARK, which offers investors 2x daily exposure in a portfolio of innovative companies in the genomics, autonomous vehicles and internet sectors, mirroring the Ark Innovation ETF ARKK.
AXS Investments also offers the AXS Short China Internet ETF SWEB featuring daily short exposure to China-based internet companies.
“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,” Bassuk said.
Bassuk added there’s excitement for more items in the AXS Investments product pipeline “for 2022 and beyond.”
In February, Direxion also filed for the Direxion Daily TSLA Bear 1X Shares, which would provide a bearish bet on Tesla shares for investors. Direxion currently offers several 3x leveraged ETFs allowing investors to bet on the bullish and bearish side for indexes like the Dow Jones Industrial Average and S&P 500 and certain sectors.
In late 2021, Tuttle Capital launched the inverse ETF to the popular Cathie Wood-led Ark Innovation with the Tuttle Capital Short Innovation ETF SARK.
The Tuttle Capital Short Innovation ETF is up 87% since launching in November and up 59% year-to-date in 2022. Ark Innovation is down 55% in 2022.
Volume for the AXS Investments Tesla Bear Daily ETF was $6 million in its first day of trading according to Bloomberg ETF Analyst Eric Balchunas. The other ETFs saw minimal volume on their first day of trading, which could impact the approval of other leveraged daily single stock ETFs.
There are around 80 single stock ETFs in the pipeline of the approval stage, including many targeting Tesla.
Photo: Scott E Read via Shutterstock