Wild price action in stocks like GameStop Corp. has led many retail brokers to impose a series of restrictions on trading activities in recent days.
But there are still a number of ways investors can get exposure to GameStop GME,
and other companies such as AMC Entertainment Holdings, AMC,
even by some analysts urging investors to exercise more than just caution.
“People who own it or are considering buying it should take note of the risk they are taking,” Todd Rosenbluth, head of mutual funds and mutual fund research at CFRA Research, emailed MarketWatch.
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‘If they think GME will be higher, it’s their call, even though we have a sell recommendation on the stock. “People see ETFs as static, but it’s not clear,” he said.
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Rosenbluth’s remarks serve as a call for awareness investors, including what they own. It comes amid a battle between individual investors and Wall Street hedge funds that has been raging for days, causing ripple effects through markets.
GameStop closed at a record high of $ 347.51 on Wednesday after a 135% surge, while AMC shares doubled in price. The extraordinary price action has worried people inside and outside Wall Street about the fact that a group of investors encouraged by chat on chat forums like Reddit could destroy the market.
‘Investors should have diversification benefits from ETFs
pay attention to what is inside to prevent the unnecessary risk from being accepted, ”Rosenbluth wrote to CFRA.
He noted, for example, that the popular fund SPDR S&P Retail Fund XRT,
commonly referred to by its symbol XRT, saw a big jump in GameStop as part of its holdings, through its stratospheric climb, which makes up 20% of the fund.
ETF.com
“Equally weighted XRT is now dominated by GME,” Rosenbluth wrote in a note.
CFRA also states that Wedbush ETFMG Video Games Tech ETF GAMR,
has a 14% position in GameStop.
Another thing to consider, Rosenbluth said, is that when ETFs strive to gain exposure to GameStop, or other popular stocks highlighted by online forums, it is that some ETFs are now below exposed to GameStop, and others as a result of their sudden growth.
GameStop’s market value at the last check was $ 17 billion, after reaching a peak market of about $ 24 billion on Wednesday, a noticeable increase from the estimate of $ 1.3 billion to 2021.
Other ETFs with exposure to GameStop include Direxion Daily Retail Bull 3x Shares RETL,
Invesco S&P SmallCap Value with Momentum ETF XSVM,
Invesco S&P SmallCap 600 Income ETF RWJ,
and Invesco S&P SmallCap Consumer Discretionary ETF PSCD,
ETF.com
For AMC Entertainment Holdings, there are 27 ETFs exposed, with IQ Chaikin US Small Cap ETF CSML,
Major U.S. Small Cap Multi-Factor ETF PSC,
Schwab Fundamental U.S. Small Business Index FNDA,
and Invesco RAFI Strategic US ETF IUSS,
according to ETF.com representing the top funds.
In the Thursday trade, the markets on Wednesday mostly tried to shake off a significant slump, inspired in part by concerns about the effects of wild trading in AMC, GameStop and others.
The Dow Jones Industrial Average DJIA,
and the S&P 500 index SPX,
was higher and on course to recoup many of the losses from their worst one-day slide in three months.