As a way of reducing bank-turmoil losses, it seems that ETFs in specific sectors are becoming more popular.
Todd Rosenbluth from VettaFi claims that this trend applies to ETFs which only hold a handful of large companies in specific industries.
“[They’re] going to be a complement to a broader S&P 500 strategy,” the firm’s head of research told CNBC’s “ETF Edge” on Monday. “Active management and actively managed ETFs have been a popular complement to existing core strategies this year,” said the head of research.
Rosenbluth believes that ETFs with a narrow focus on big-cap sectors can increase potential gains.
“[In] the same way that you might do individual stocks of favored names … now you’re getting the benefits of five or six of these companies to augment that,” he added.
When asked whether these sector ETFs were attempting to reintroduce FAANG stocks — which refers to the five popular tech companies Meta, formerly Facebook (META).; Amazon (AMZN).; Apple (AAPL).; Netflix (NFLX). Alphabet (GOOG) — Rosenbluth explained it’s difficult to build ETFs with exposure to only big-cap stocks because companies might be classified in different sectors.
An ETF is not the best way to get this right now. [holding] He said that only those six or five stocks are important. There’s an ETF coming soon that allows you to only make calls on these five or six companies.
John Davi, Astoria Advisors, suggested last week that bank turmoil could expose potential problems in ETFs linked to specific sectors.
Davi, who manages the AXS Astoria Sensitive ETF, said that “you need to be aware of your risk.”
Bank turmoil can be a blessing for others.
“Not just an opportunity to make a living”
Roundhill Investments, an ETF provider, plans to launch three ETFs in the big-cap sectors: Big Tech (BIGT), Big Airlines, and Big Defense (BIGD).
These “BIG ETFs”, which will join the Big Bank ETF (“BIGB”), launched last Tuesday, will be joined by these “BIG ETFs”. According to the company’s website it has a median market capital of $145.5 billion
Dave Mazza is the chief strategy officer of the firm and sees similar opportunities to grow beyond the financials.
He said that people are bidding up larger names in the banking sector, particularly because they might be the ones who benefit from the increased regulation. “The intention here was that [the BIGB] This is more than a standalone opportunity. It’s a way to express your ideas. [of] Being a leader and sweeping down the line.”
Based on Friday’s close, the Roundhill Big Bank ETF has fallen almost 5% since its launch.