Single-stock exchange-traded funds may be the industry’s next big thing. Direxion filed in February for 24 ETFs based on eight specific stocks – Amazon, Meta, Alphabet, Microsoft, Netflix, Nvidia, Apple, and Tesla.
If approved, these would be the first single-stock ETFs to trade in the United States.
However, Direxion’s funds — which would reset on a daily basis — are likely not for everyone, “Most of our ETFs are tools for traders, people who can manage their portfolios on a daily basis, to make decisions either to amplify exposure or to hedge another risk in their portfolios,” the firm’s head of product David Mazza said.
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These can be tools for traders that can be very powerful for them if used appropriately and we really advocate for folks to do that due diligence, do the education on our website or other sources to understand that. And if they’re not right for you, don’t use them,” he said.
An ETF is a basket of securities, shares of which are sold on an exchange. They combine features and potential benefits similar to those of stocks, mutual funds, or bonds. Like individual stocks, ETF shares are traded throughout the day at prices that change based on supply and demand.
