From crypto calls to meme stocks: October's wildest ETF launches target retail volatility
Active Retail Meme Stocks | Active Special Situations | Floki Crypto | Circle Covered Calls | Active Global Small Caps
Listed in US | Sweden | Canada | Australia
Ultumus global tracking of ETF launches has again uncovered a selection of unusual products providing ready packaged access to sophisticated strategies. Retail investors have a nose for sniffing out fashions and fads that can produce huge volatility and spectacular returns. Small cap special situations can do their own thing regardless of the wider market. The speculative frenzy around some crypto related names makes call options expensive and the tortoise trade could be to harvest income from selling options. And a globally diversified portfolio of small stocks can still contain some regional and global leaders. In some cases, competition is driving down fees.
Roundhill Meme Stock ETF (ticker:MEME) is an actively managed ETF focused on stocks with high retail participation selected based on options with the highest implied volatility. The current lineup includes vegan protein group Beyond Meat, bitcoin miner Cipher Mining, AI datacentre group IREN, Greenland rare earth developer Critical Metals, mobile electricity generator Bloom Energy Corp, online property agent Opendoor, memory technology manufacturer Sandisk, AI and HPC digital infrastructure group Applied Digital Corporation, AI group BigBear.ai and nuclear reactor designer Oklo. The expense ratio of 0.69% is close to the average of 0.63% for an active ETF.
F/m Emerald Special Situations ETF (ticker:SPIT) is another actively managed ETF looking for a variety of “special situations” including technology, corporate reorganisation, transformational M&A, spin-offs, business model changes, management changes, external disruption, regulatory change and litigation. It is “semi-transparent” in disclosing quarter end holdings. As of June 11th, the largest holding was actually more of a macro trade - a Treasury Inflation Protected Securities ETF. Others include cancer data group Guardant Health, sports betting data group Genius Sports, and optical/photonics maker Lumentum Holdings. Emerald have been investing in small cap special situations since 1992 and have given TV interviews on biotech and AI stocks. The costs of 0.89% are above average.
In digital assets, ETF issuers continue to lead the way in widening the market for some less well known coins as Valour launched the first ETP on the FLOKI token: Valour Floki SEK (FLOKI). Floki’s market capitalisation of around USD 600 million ranks it as roughly the 140th largest cryptocurrency. Floki is used across the Floki ecosystem for payments, governance, staking, and access to services including decentralised finance platforms, an NFT gaming metaverse called Valhalla, and educational resources through the University of Floki. This university does not have a physical campus but has partnered with the University of Miami. FLOKI’s expense ratio of 1.9% is above average and probably reflects the scarcity value of being the only token.
The first stablecoin issuer IPO, Circle Internet Group, has had an interesting share price trajectory more than tripling on day one, and nearly tripling again before coming round full circle to its closing share price on the first day of listing. Though this might appear to be a trading stock some ETF issuers also use it to generate income. The Canadian- listed Harvest Circle Enhanced High Income Shares ETF (TSX: CRCY) sells call options against up to 50% of its holding to generate extra income and also uses around 25% leverage. Its management fee of 0.40% is well below average for a covered call single stock ETF where TERs typically range from 0.60% to 0.97%; covered call index ETFs have lower costs between 0.20% and 0.45%.
Avantis Global Small Cap Value ETF has just listed on CBOE Australia. It is actively managed by American Century Investments and has a global mandate to invest in small caps. The top ten holdings are all sized below 1% and include Missisippi-headquartered Hancock Whitney bank, the largest US auto parts supplier Lear Corporation, and Thor Industries, the world’s largest maker of recreational vehicles that are also used as “motor homes” in trailer parks in the US. The cost ratio of 0.39% is below average for an active small cap ETF - and actually less than some passive small cap ETFs charge.
Comments