Crypto exchange Bullish hasn’t gone public yet, but that isn’t stopping an ETF issuer from trying to capitalize on the hype.
On Monday, ProShares filed for Ultra BLSH — an exchange-traded fund tied to Bullish — which would provide twice the stock’s daily returns. The company’s shares are expected to start trading on Wednesday and its initial public offering is more than 20 times oversubscribed.
It’s the latest example of fund issuers seeking to tap market buzz in the quest for flows in an industry with more than 4,000 offerings. Since June, at least six issuers have rushed to file for ETFs tied to a company before or just after it goes public. While first-mover advantage has long been a fixture in ETFs, the race has rarely been so intense.
The trend can be attributed to the ease with which issuers can put out filings, according to Bloomberg Intelligence’s Athanasios Psarofagis.
“Filings have become so frictionless now — it’s really just a matter of changing a ticker and sending it through,” he said. “You know the market is hungry when single-stock ETFs are getting lined up for stocks that haven’t even gone public yet.”
Take another example from just last week, when newly public Firefly Aerospace Inc. started trading on Thursday. A day prior to that, one firm had already submitted paperwork for ETFs that would track twice the company’s daily returns or deliver the opposite return of the stock by the same magnitude.
In June, just hours after Circle Internet Group Inc. went public, at least three issuers dashed to file related ETFs. Similarly, a few days after Figma Inc. debuted at the end of July, at least four firms filed paperwork with the US Securities and Exchange Commission for leveraged single-stock ETFs tied to the company.
Leveraged Bets
Within this sprint for flows, leveraged single-stock ETFs, which offer amped-up bets on various strategies, have emerged as an experimental subject.
These funds have grown into a booming corner of the $12 trillion US industry, attracting billions of dollars as the lineups continue to expand. This year, more than 100 leveraged or inverse products have already been introduced to the market, according to Bloomberg Intelligence, eclipsing the record 73 leveraged or inverse ETFs launched in the US in 2024.
The frenzied interest comes even as they charge more compared to an industry-wide average of 0.61% for equity ETFs.
“ProShares’ new filing is another example of the proliferation of levered ETFs in the marketplace helping investors amplify their investment view,” said Jane Edmondson, head of index product strategy at TMX VettaFi. “It is important to note, however, that the typical expense ratios of these products is quite high. Levered trading convenience, whether a single stock or basket of names, has its tradeoffs.”
The newest filings for these types of funds have been linked to smaller, more volatile stocks, according to data from Strategas. While an initial wave tended to focus on mega-caps like Nvidia Corp., the market value of underlying stocks that the ETFs track now tends to be much lower.
“Levered single-stock ETFs are a tiny corner, yet their usage rate is rapidly climbing,” said Todd Sohn, senior ETF analyst at Strategas. “This just goes to show how hot a space it is now, in a very saturated world.”
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