A new way to short Tesla: AXS Investments launches new single-stock ETFs

Investors have a new way to make bullish and bearish bets on large-cap stocks.

AXS Investments launched eight of 18 approved single-stock leveraged ETFs this month. The funds aim to increase exposure of short-term single-stock investments.

“They’re designed for active traders, traders that are looking to make tactical trading decisions on a daily basis,” the firm’s CEO, Greg Bassuk, told CNBC’s “ETF Edge” on Monday. “As this market has matured for leveraged ETFs … we’re excited to bring the single-stock ETF access to the U.S. market.” 

Bassuk notes AXS’ new products are based on actively traded stocks, including sector leaders such as Tesla, NVIDIA, PayPal, Nike and Pfizer among others in its first tranche. Funds of a similar nature are already available in European markets, he added.

“It’s [ETF innovation is] always a balance between coming out with better tools for investors, and doing it within the regulatory constraints,” Bassuk explained.

SEC Skepticism

Dave Nadig, financial futurist at VettaFi, addressed turnover and regulatory concerns among single-stock ETF skeptics. It’s an issue raising eyebrows at the Securities and Exchange Commission, too.

“My concerns are that people don’t read the labels well enough,” he said, explaining how volatility from these funds can “kill” investors’ returns if the funds are held improperly. “They don’t necessarily understand that you cannot hold these things for a week or two.”

Investors may also lose the advantages of diversification as single-stock ETFs do not follow entire indexes, according to the SEC.

“Because levered single-stock ETFs in particular amplify the effect of price movements of the underlying individual stocks, investors holding these funds will experience even greater volatility and risk than investors who hold the underlying stock itself,” the SEC said in a statement this month. 

However, Bassuk contends the new ETFs give investors another option that may help them profit from daily moves. Plus, he believes the ETFs provide fewer risks associated with buying on margin.

“Investors that buy on margin could potentially lose more than their initial investment, whereas this single stock ETF, in that regard, we believe is a better mousetrap in that investors can’t lose more than they’re investing,” Bassuk said. 

Bearish bets among the eight live single-stock leveraged ETFs are lower since their July 14 listing date. The biggest laggard was the AXS 1.5X PYPL Bear Daily ETF, off nearly 22%.

Bullish bets are showing stronger returns. The AXS 1.5X PYPL Bull Daily ETF is up just under 27%.

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