{"id":39123,"date":"2025-12-12T12:37:23","date_gmt":"2025-12-12T12:37:23","guid":{"rendered":"https:\/\/financialrush.com\/?p=39123"},"modified":"2025-12-12T12:37:23","modified_gmt":"2025-12-12T12:37:23","slug":"hundreds-of-new-funds-launch-experts-warn-of-risks","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=39123","title":{"rendered":"Hundreds of new funds launch, experts warn of risks"},"content":{"rendered":"<p> \n<\/p>\n<div id=\"SpecialReportArticle-ArticleBody-6\" data-module=\"ArticleBody\" data-test=\"articleBody-2\" data-analytics=\"SpecialReportArticle-articleBody-6-2\"><span class=\"HighlightShare-hidden\" style=\"top:0;left:0\"\/><\/p>\n<div class=\"InlineImage-imageEmbed\" id=\"ArticleBody-InlineImage-108001004\" data-test=\"InlineImage\">\n<div class=\"InlineImage-wrapper\">\n<div>\n<p>Skaman306 | Moment | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"group\">\n<p>Hundreds of <a href=\"https:\/\/www.cnbc.com\/etf-strategist\/\">exchange-traded funds<\/a> have launched to let investors amplify their bets that a single company stock will either go up or down.<\/p>\n<p>This category, <a href=\"https:\/\/www.morningstar.com\/funds\/these-etfs-had-one-job-they-didnt-do-it-costing-traders-billions\" target=\"_blank\">single-stock ETFs<\/a>, now has a total of around 377 U.S. products \u2014 276 of which have launched in 2025, as of Dec. 9, according to Zachary Evens,<strong> <\/strong>manager research analyst at Morningstar.<\/p>\n<p>Those funds may provide access to some of the most \u201cexciting, biggest technology companies\u201d such as <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"SpecialReportArticle-QuoteInBody-3\"><a href=\"https:\/\/www.cnbc.com\/quotes\/NVDA\/\">Nvidia<\/a><span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"\/><\/button><\/span><\/span><\/span>, <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"SpecialReportArticle-QuoteInBody-4\"><a href=\"https:\/\/www.cnbc.com\/quotes\/TSLA\/\">Tesla<\/a><span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"\/><\/button><\/span><\/span><\/span>, <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"SpecialReportArticle-QuoteInBody-5\"><a href=\"https:\/\/www.cnbc.com\/quotes\/AAPL\/\">Apple<\/a><span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"\/><\/button><\/span><\/span><\/span> or <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"SpecialReportArticle-QuoteInBody-6\"><a href=\"https:\/\/www.cnbc.com\/quotes\/AMZN\/\">Amazon<\/a><span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"\/><\/button><\/span><\/span><\/span>, Evens said. <\/p>\n<p>But the funds also come with \u201csignificant risk that the bet goes wrong,\u201d he said. <\/p>\n<\/div>\n<div class=\"group\">\n<div class=\"RelatedContent-relatedContent\" id=\"SpecialReportArticle-RelatedContent-1\">\n<div class=\"RelatedContent-container\">\n<div class=\"RelatedContent-nonCollapsibleContent\">\n<h2 id=\"more-from-etf-strategist\" class=\"RelatedContent-header\">More from ETF Strategist:<\/h2>\n<div class=\"group\">\n<p>Here\u2019s a look at other stories offering insight on ETFs for investors.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"group\">\n<p>While investing in a single company stock provides one-time exposure, single-stock ETFs tout strategies to magnify bets on one ticker symbol\u2019s gains or losses. These <a href=\"https:\/\/www.cnbc.com\/2023\/12\/20\/what-investors-need-to-know-about-single-stock-etfs.html\">might include<\/a> swaps, futures and other derivatives.<\/p>\n<p>Leveraged single-stock ETFs advertise a greater short-term return. If a stock goes up by 2%, the ETF may provide a 4% gain, for example, or other multiple depending on the strategy.<\/p>\n<p>Inverse ETFs offer investors the opposite of a stock\u2019s return. If a stock goes up by 1%, the ETF may decline by the same percentage, for example.<\/p>\n<p>And covered call ETFs let investors bet a company\u2019s stock will go up while selling call options against it, with the intention of generating income for investors.<\/p>\n<p>These are designed to achieve these results on a regular, even daily, basis, and recalculate their exposure. <\/p>\n<p>Yet despite the funds\u2019 promises that their strategies may juice investor gains, experts say buyers should beware the risks, a <a href=\"https:\/\/www.sec.gov\/newsroom\/speeches-statements\/crenshaw-single-stock-etfs-20220711\" target=\"_blank\">warning the SEC<\/a> similarly shared in 2022 when these products first emerged.<\/p>\n<p>Over long periods, investors\u2019 returns may be \u201csignificantly lower than they would expect based on the performance of the underlying stock,\u201d which would be even more pronounced in volatile markets, SEC Commissioner Caroline Crenshaw wrote at the time. <\/p>\n<\/div>\n<h2 id=\"for-many-investors-their-experience-is-not-positive\" class=\"ArticleBody-subtitle\"><a id=\"headline0\"\/>\u2018For many investors, their experience is not positive\u2019<\/h2>\n<div class=\"group\">\n<p>Single-stock ETFs have had about $44 billion in all-time cumulative flows, based on Morningstar Direct data as of Nov. 30. Year-to-date flows are $22.3 billion.<\/p>\n<p>Yet the funds have $41.2 billion in assets under management, also as of Nov. 30. <\/p>\n<p>\u201cThey have actually taken in more money than they currently have in assets,\u201d Evens said. \u201cIn aggregate, the performance of these is not positive, and likely for many investors, their experience is not positive as well.\u201d<\/p>\n<p>The single-stock ETF fund market is top-heavy, Evens said. Just seven funds have more than $1 billion in assets apiece, while 303 each have less than $100 million in assets, he said. Notably, 29 each have less than $1 million. <\/p>\n<p>The top fund by net assets as of November was <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"SpecialReportArticle-QuoteInBody-9\"><a href=\"https:\/\/www.cnbc.com\/quotes\/TSLL\/\">Direxion Daily TSLA Bull 2x Shares<\/a><span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"\/><\/button><\/span><\/span><\/span>, with nearly $6.4 billion, according to Morningstar data. That was followed by <a id=\"107247200\" href=\"https:\/\/www.cnbc.com\/quotes\/\" type=\"security\" brand=\"cnbc\" section=\"[object Object]\" contentclassification=\"\">GraniteShares 2x Long NVDA Daily ETF<\/a>, with almost $4.3 billion, and <a id=\"108084711\" href=\"https:\/\/www.cnbc.com\/quotes\/\" type=\"security\" brand=\"cnbc\" section=\"[object Object]\" contentclassification=\"\">YieldMax MSTR Option Income Strategy ETF<\/a>, with almost $1.9 billion.<\/p>\n<\/div>\n<div role=\"region\" aria-labelledby=\"Placeholder-ArticleBody-Video-108238218\">\n<div role=\"button\" tabindex=\"0\" id=\"Placeholder-ArticleBody-Video-108238218\" class=\"PlaceHolder-wrapper\" data-vilynx-id=\"7000397609\" data-test=\"VideoPlaceHolder\">\n<div class=\"InlineVideo-videoEmbed\" id=\"InlineVideo-0\" data-test=\"InlineVideo\">\n<div class=\"InlineVideo-wrapper\">\n<div class=\"InlineVideo-inlineThumbnailContainer\"><span class=\"InlineVideo-videoButton\"\/><span\/><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"group\">\n<p>Generally, many of the products won\u2019t be successful in gaining a significant market share, Evens said. But the chance that they do, combined with their high fees, represents a lucrative opportunity for providers, he said.<\/p>\n<p>Single-stock ETFs came with a 1.07% annual fee for the average investor as of the end of March 2024, according to <a href=\"https:\/\/www.morningstar.com\/funds\/most-investors-single-stock-etfs-are-best-left-alone\" target=\"_blank\">Morningstar<\/a>, or three times the cost of the average U.S. fund. <\/p>\n<p>What\u2019s more, there are \u201calmost infinite iterations\u201d of possible single-stock ETF strategies based on thousands of U.S. stocks and various approaches, including derivatives and swaps, according to Evens.<\/p>\n<p>\u201cThey can keep launching these and hope they finally strike lightning in a bottle with them,\u201d Evens said.<\/p>\n<\/div>\n<h2 id=\"single-stock-etfs-not-intended-for-long-term-holding\" class=\"ArticleBody-subtitle\"><a id=\"headline1\"\/>Single-stock ETFs not intended for long-term holding<\/h2>\n<div class=\"group\">\n<p>More investors are asking about single-stock ETFs, particularly those tied to <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"SpecialReportArticle-QuoteInBody-13\"><a href=\"https:\/\/www.cnbc.com\/quotes\/TSLA\/\">Tesla<\/a><span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"\/><\/button><\/span><\/span><\/span>, <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"SpecialReportArticle-QuoteInBody-14\"><a href=\"https:\/\/www.cnbc.com\/quotes\/NVDA\/\">Nvidia<\/a><span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"\/><\/button><\/span><\/span><\/span>, <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"SpecialReportArticle-QuoteInBody-15\"><a href=\"https:\/\/www.cnbc.com\/quotes\/AMZN\/\">Amazon<\/a><span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"\/><\/button><\/span><\/span><\/span> and <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"SpecialReportArticle-QuoteInBody-16\"><a href=\"https:\/\/www.cnbc.com\/quotes\/AAPL\/\">Apple<\/a><span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"\/><\/button><\/span><\/span><\/span>, said Ashton Lawrence, a certified financial planner, director and senior wealth advisor at Mariner Wealth Advisors in Greenville, South Carolina.<\/p>\n<p>Much of that interest has been driven by past gains and investors who want to capitalize on future returns, he said. <\/p>\n<p>These types of ETFs can be appropriate for \u201cvery small, satellite positions\u201d for investors with very short-term time horizons, Lawrence said. <\/p>\n<p>However, the strategies are generally not appropriate for individuals who are investing long-term for retirement, trying to reduce volatility or who are already concentrated in single-stock positions, he said.<\/p>\n<p>\u201cIt\u2019s really just a tool, but any tool can lead to [a] bad experience if you\u2019re applying it to the wrong circumstance,\u201d Lawrence said.<\/p>\n<p>Because the ETFs reset daily and use leverage, their performance can deviate meaningfully from the stock over time, Lawrence said. So while an investor may expect that an ETF marketing 2x the exposure would mean a 200% return on an underlying stock that has gone up 100% over three years, that won\u2019t necessarily be the case, he said.<\/p>\n<\/div>\n<div class=\"group\">\n<p>Investors need to keep in mind that these funds are trading tools, Evens said. <\/p>\n<p>\u201cThese are speculative instruments that are not intended to be held for long periods of time,\u201d Evens said, and are instead intended to be held for a day or two, or even just hours intraday.<\/p>\n<p>Still, there are risks over shorter time periods. Recent <a href=\"https:\/\/www.morningstar.com\/funds\/these-etfs-had-one-job-they-didnt-do-it-costing-traders-billions\" target=\"_blank\">Morningstar research<\/a> found that leveraged single-stock ETFs don\u2019t necessarily deliver the returns they promise over more than a single day. Moreover, some of the top leveraged single-stock ETFs don\u2019t deliver their target return on an average day.<\/p>\n<p>One reason these strategies face challenges is volatility decay. If a stock falls by 10%, there must be a gain of more than 10% to be even, Evens said, while the investment value can decline over time due to leverage and volatility.<\/p>\n<\/div>\n<\/div>\n\n<br \/><a href=\"https:\/\/www.cnbc.com\/2025\/12\/12\/single-stock-etfs.html\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Skaman306 | Moment | Getty Images Hundreds of exchange-traded funds have launched to let investors amplify their bets&hellip;\n","protected":false},"author":3,"featured_media":39124,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-39123","post","type-post","status-publish","format-standard","has-post-thumbnail","category-investing","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/39123","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=39123"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/39123\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/39124"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=39123"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=39123"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=39123"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}