Insane stock price action like GameStop Corp. In recent days, many retail brokers have imposed a series of restrictions on trading activity.
But there are still a number of ways investors can gain exposure to GameStop GME,
and other companies such as AMC Entertainment Holdings, AMC,
even through some analysts, investors are warning to take more than a dollop of caution.
“People who own them or are considering buying them should be aware of the risk they run,” Todd Rosenbluth, head of ETF and mutual fund research at CFRA Research, told MarketWatch via email.
Read: These are the largest short periods in the stock market, including GameStop and AMC
“If they think GME will go higher, that’s their call, even though we have a sell recommendation for the stock. People think of index ETFs as static, but they clearly aren’t, ”he said.
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Rosenbluth’s comments serve as a call to awareness investors, including around what they own. They come in the midst of a battle between individual investors and Wall Street hedge funds that has been raging for days and causing ripple effects in the markets.
On Wednesday, GameStop closed at a record high of $ 347.51 after a 135% rise, as AMC shares quadrupled in price. The unusual price action has worried people inside and outside of Wall Street that a group of investors encouraged by conversations on chat forums like Reddit could be wreaking havoc on the market.
“Investors looking for diversification benefits from ETFs should be
pay attention to what’s in it to avoid taking unnecessary risks, ”wrote Rosenbluth of CFRA.
For example, he noted that the popular fund SPDR S&P Retail Fund XRT,
commonly referred to by the ticker symbol XRT, saw a big jump in GameStop as part of its holdings, through its stratospheric rise, which made up 20% of the fund.
ETF.com
“Equally weighted XRT is now dominated by GME,” Rosenbluth wrote in a note.
CFRA also says that Wedbush ETFMG Video Games Tech ETF GAMR,
holds a 14% position in GameStop.
Another thing to consider, Rosenbluth said, is that in pursuing ETFs to gain exposure to GameStop, or other popular stocks highlighted by online forums, some ETFs are now underexposed to GameStop, and others due to their sudden growth.
GameStop’s market value was $ 17 billion, on last check, after reaching a peak market cap of about $ 24 billion on Wednesday, a dazzling increase from its estimate of $ 1.3 billion to begin in 2021.
Other ETFs with GameStop exposure include Direxion Daily Retail Bull 3x Shares RETL,
Invesco S&P SmallCap Value with Momentum ETF XSVM,
Invesco S&P SmallCap 600 Revenue ETF RWJ,
and Invesco S&P SmallCap Consumer Discretionary ETF PSCD,
ETF.com
For AMC Entertainment Holdings there are 27 ETFs that have exposure, with IQ Chaikin US Small Cap ETF CSML,
Main US Small-Cap Multi-Factor ETF PSC,
Schwab Fundamental US Small Company Index FNDA,
and Invesco RAFI Strategic US ETF IUSS,
according to ETF.com representing the best funds.
In trading on Thursday, markets tried to shake off a significant downturn on Wednesday in particular, prompted in part by concerns about the knock-on effects of wild trading in AMC, GameStop and others.
The Dow Jones Industrial Average DJIA,
and the S&P 500 index SPX,
took flight higher and were on track to recoup much of the losses from their worst one-day decline in three months.