Traders work on the Katu New York Stock Exchange (NYSE) on February 20, 2025 in New York.
Spencer Platt | Getty Images
Spend a while looking at the amount of trading and you will notice something interesting: a lot of investors have been expressing huge bets on the stock market lately.
Most of them are long bets, but some are short.
It is easy to see this because the ETF business segment is growing that serves investors who want short-term huge bets on the stock market.
These are the influence and the reverse ETF. The associated ETF enhances the daily yields of index or shares using financial derivatives. For example, if the index increased by 1%daily, 2x ETF influence would bring a 2%return, 3x would bring a refund of 3%.
Inverse ETF provides opposite daily performance. Thus, 2x inverse ETF would decrease by 2% on the day the index increased by 1% and vice versa.
These influences/inverted ETFs are not just growing in the property. They become most of the daily trading of the ETF universe, which becomes most of the overall trading.
Who uses these products? This has a lot to do with the general increase in speculative behavior on the market. Options trading, bitcoin and other more speculative products grow.
“We continue to see that more investors are leaning against the influence as a way of expressing short -term attitudes on the market, but given all instability and daily titles moving on the market, it is not surprising that we see more volume and more assets into this space,” Doug Yones, Direxion CEO, one of the largest providers of services under the influence/inverse ETF, told CNBC.
It grows as a proportion of assets
The first influences/inverse ETFs in the US began in 2006 and enabled long or short bets on indexes such as S&P 500 or NASDAQ 100. Inverse ETFs with one shares were created in 2022 and they are And they grow quickly.
Largest, Enlightened QQQ (TQQQ), which provides 3x exposure to exploitation Nasdaq 100 (QQQ), has nearly $ 26 billion in assets. ETFs with a single section that affects Nvidia and Tesla They also now have significant property.
The greatest influences/inverse ETF -ov
(assets under management)
Prosharesultra QQQ (TQQQ) $ 25.7 billion
Direxion Daily Semiconductor Bull 3x (Soxl) $ 8.5 billion
Proshares Ultra QQQ (QLD) $ 7.9 billion
Ultra S&P 500 (SSO) $ 5.5 billion
Direxion Daily S & P Bull 3x (SPXL) $ 5.0 billion
Direxion Dane Tsla Bull 2x (Tsll) $ 3.5 billion
Granatishares 2x Long NVDA (NVDL) $ 4.2 billion
Part of this is the effect of the bull market: supplies have been significantly increased in recent years, so the total assets are higher. However, these half -time/inverse ETFs are not only growing assets, but they become most of the ETF universe.
In 2016, when ETF had about $ 2 trillion property under management (AUM), an influential/inverse ETF were about 2% of that AUM, according to Strateigs.
Today, ETF has about $ 11 trillion dollars under management, but influences/inverse ETFs make up about $ 81 billion or nearly 8% of the total AUM.
Why do these products grow?
“I believe there is a generational effect in the game, I think there is a big appetite among younger merchants who want to play with the influence because of the gains they can provide,” said Todd Sohn, head of the ETFS strategy, for CNBC. “The obstacles to entering are extremely low, you can buy these products on your phone.”
Yones estimated that 75% of ownership of these products were retailers and 25% institutional, which included Hedge funds, trade tables, large brokerage companies and “anyone who has a book of positions that want to be neutral on the market”.
He estimated that a small but significant percentage of retail retailer (12% -15% of the total number) outside the US, which aligns with previous growth reports Demand for 24-hour trading It comes partly from retailer in South Korea, Japan and Europe.
A growing part of the volume of daily trading
Improvements and Inverse ETFs, including the influence and reverse ETF with one discrete, are now routinely appearing among the most prominent ETFs that are traded on a daily basis.
An easy way to look at this is the average daily volume of dollars, the total amount of money that is traded daily in ETF.
The top ETF per daily amount of dollars are still ETF are related to the largest indexes, mostly S&P 500, Russell 2000 and Nasdaq 100.
Top ETFs for an average of 3-month volume of dollars
SPDR S&P 500 (SPY) $ 27.7 billion
Invesco QQQ (QQQ) $ 15.3 billion
Ishares Russell 2000 (IWM) $ 5.7 billion
Ishares Core S & P 500 (IVV) $ 3.9 billion
Source: Strateggigs
However, the fifth largest ETF per day volume of daily dollar in the last three months is the enlightened QQQ, which allows three times the exposure of Nasdaq 100.
All in all, five of the top 20 ETF per average daily volume of dollars is used/vice versa.
Related/Inverse ETF -ovi: The greatest avg. 3-month volume of dollars
Prosharesultra QQQ (TQQQ) $ 3.8 billion
Direxion Daily Semiconductors Bull 3x (Soxl) $ 2.1 billion
Direxion Dane Tsla Bull 2x (Tsll) $ 1.5 billion
Proshares UltraPro Short QQQ (SQQQ) $ 1.4 billion
Granatishares 2x Long Nvda (NVDL) $ 1.3 billion
Source: Strateggigs
Daily resetting
These products are bets on short -term momentum, but have one extra feature that has shown to investors to wrap their heads: they are reset daily.
Due to its complex effects, it can be difficult to understand which real yields will be on any more than a day. This means that holding a 2x effect on any more than one day can result in a significantly less than 2x refund, depending on the market direction.
Here’s an example: Suppose the S&P 500 has increased by 10%one day and then the next day drops 10%.
Investing in the amount of $ 100 would look like this:
S & P 500: Hypothetic investment of $ 100
Day 0 $ 100
1. Day (more than 10%): $ 110
2. Day (down 10%). $ 99
After two days of this, you have $ 99, so you have reduced 1%. If you had a used product during those two days, it seems you would be reduced by 2%or to have $ 98.
But because of everyday reset, it doesn’t happen.
S & P 500: Hypothetic investments in the amount of $ 100 in 2x Increasing
Day 0 $ 100
1. Day (more than 10%, under the influence of 20%): $ 120
2. Dan (10%fall, under the influence of $ 20%) $ 96
You actually have $ 96, instead of $ 98, and keep in mind that it excludes fees.
As time goes on, these calculations become gradually more complex.
As a result, those who offer these products are routinely state that they are not intended for investors of purchases and retaining.
These funds have very large daily reversals, so most investors seem to understand the risk of keeping these products on any more than a day.
But Sohn said to CNBC that all investors in useful products should have been very careful.
“However, at some point it helps to record the risk involved whenever the market turns south,” Sohn told CNBC.
Doug Yones, the Direxion CEO will be on the part of the ETF edge of the half on Monday at 12:35 pm, and will also enjoy ETF Edge from 1:30 pm. He will be joined by Todd Rosenbluth, chief of research on Vettafi.
