A major exchange-traded fund provider is investing heavily in two popular stocks: megacap tech stocks and weight-loss drug stocks.
In healthcare, Roundhill Investments is preparing to launch a fund focused on the companies behind GLP-1 drugs. Dave Mazza, the firm’s chief strategy officer, expects to have more information on the fund’s debut in May.
“It’s going to be important to keep an eye on this area,” Mazza told CNBC’s “ETF Edge” this week. “We will see some rapid advances in medicines. We are already seeing rapid progress with market leaders bringing new medicines to market and opening up new opportunities.”
This wouldn’t be Roundhill’s first new product this year. The company launched leveraged and inverse exchange-traded funds three weeks ago that track widely held technology stocks. These are the Roundhill Daily 2X Long Magnificent Seven ETF (MAGX) and the Roundhill Daily Inverse Magnificent Seven ETF (MAGQ).
MAGX is designed to benefit from the winnings of the “Magnificent Seven”. alphabet, Amazon, Apple, Metaplatforms, Microsoft, Nvidia And Tesla. Meanwhile, MAGQ offers investors the opportunity to bet negatively on the group.
“These are tools that can be used for traders who have short-term views on the Magnificent Seven – both positive and negative to express that view,” Mazza said. “If you’re bullish, maybe look at the 2x increased exposure to MAGX. Or, if you want to hedge your position or take a completely bearish view in the short term, there is MAGQ.”
Both funds adjust their performance daily. According to Mazza, they are therefore considered risky decisions for investors.
“You need to be able to see your positions on a daily basis. You can hold them for more than a day, but you have to be able to reevaluate, ‘Is this the right trade for me?'” Mazza said. “They are not intended to be held for long periods of time.”
“You’re going to hit a lot.”
Todd Rosenbluth of VettaFi warns that leveraged and inverse ETFs may not be suitable for every investor due to volatility.
“You really have to go in with your eyes wide open and understand that these can do very well or very poorly on any given day,” said the company’s head of research. “I like to think of leveraged and inverse ETFs like swinging around the fences in baseball. You’re going to hit some home runs.”. You’re going to hit a lot.”
Since its debut on Feb. 29, the Roundhill Daily 2X Long Magnificent Seven ETF is up nearly 7%, while the company’s Daily Inverse Magnificent Seven ETF is down nearly 4%.
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2024-03-23 15:00:01
www.cnbc.com
