Daily ETF Watch: Short-Squeeze ETF Plan

June 09, 2014

The ETF wrapper is about to head into the realm of short squeezes.

What happens when a shorted stock suddenly surges? Now, there’s an ETF for that.

ETF Issuer Solutions, the distributor of Recon Capital Advisors’ Recon Capital Nasdaq 100 Covered Call ETF (QYLD), is looking to launch its own ETF called the Short Squeeze Fund, a fund that will be benchmarked against the Russell 2000 Index and will trade under the symbol “SQZZ.”

The actively managed fund’s premise is to invest in equities that have a higher potential for capital appreciation as a result of a “short squeeze.” Short squeezes occur when investors who have sold short shares of an equity security are forced to cover or buy back the short position due to news or events that result in share appreciation, according to a regulatory filing.

The fund is coming to market at a time when broader markets are reaching new highs in 2014. The S&P 500 Index is up more than 5 percent year-to-date after surging 32 percent in 2013, making it a tough market for short-sellers all around.

For example, momentum stocks such as Apple, which sold off heavily in late March, have rebounded sharply in recent weeks.

Filing

Global X has put into registration five proposed international ETFs that are designed to mimic hedge fund investments in developed and emerging markets.

The firm is hoping to replicate its successful $499 million Global X Guru ETF (GURU | B-57), a hedge fund replication ETF that surged more than 47 percent last year and that is up 1.6 percent year-to-date. GURU has gathered $88.8 million in 2014, according to data compiled by ETF.com Analytics.

The firm’s latest proposal details the following funds:

  • INDXX Guru Japan Index ETF
  • INDXX Guru United Kingdom Index ETF
  • INDXX Guru China Index ETF
  • INDXX Guru India Index ETF
  • INDXX Guru Brazil Index ETF

Each fund will consist of companies that hedge fund managers have disclosed investments in via publicly available filing, according to the regulatory filing. Associated fees and tickers were not yet made available for the funds.

Find your next ETF

Reset All