The Rise of Single-Stock ETFs: A Guide for Investors

Single-stock exchange-traded funds (ETFs) have gained popularity among risk-seeking investors, with nearly four dozen single-stock ETFs in the US market, many of which track popular stocks like Apple, Microsoft, and Amazon. These leveraged ETFs have about $3.3 billion in net assets and are seen as tapping into the market's "gambling mindset." While they offer quick exposure and leverage, experts caution that they are not a smart long-term strategy and come with higher fees and volatility. The US Securities and Exchange Commission has warned retail investors about the extra risks associated with single-stock ETFs, emphasizing the need for a short-term view and daily monitoring. The market for these ETFs is expected to see more innovation and expansion, with AI being a hot area of interest.