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Market Buzz ETF to Launch Thursday

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What You Need to Know

  • The BUZZ ETF from VanEck Vectors consists of the top 75 large-cap stocks receiving the most positive chatter online.
  • An AI algorithm will uncover the top 75 stocks, and the index will rebalance monthly.
  • The Cboe has filed with the SEC to trade VanEck's Bitcoin ETF, which is pending before the SEC.

Get ready for a new ETF that aims to capitalize on the market buzz created by individual investors using Reddit, Twitter and other online trading platforms. On Thursday VanEck Vectors will debut the BUZZ ETF, which consists of the top 75 large-cap stocks receiving the most positive chatter online according to an AI algorithm.

There is an index for that  the BUZZ NextGen AI US Sentiment Leaders Index, which has been endorsed by Dave Portnoy. Portnoy is the founder of Davey Day Trader Global (DDTG ), a YouTube channel he uses to live stream his market sentiment and trades online, and Barstool Sports, which produces online sports and pop-culture content.

On Tuesday Portnoy shared a video on Twitter previewing the BUZZ ETF launch on the NYSE, front-running a planned press release. “Twitter, social media, all of it is dictating stock prices,” announced Portnoy standing in front of a fake NYSE podium.

Later in the day, it was reported that Portnoy is a partial owner and director of Buzz Holdings ULC, the business entity that licenses the strategy to VanEck.

“Twitter, Reddit, Stocktwits and dozens of other platforms have established communities for investors to discuss stocks and as a result of so… [which] have become an alternative dataset for investors to scour and utilize for a performance edge,” accordingto Ed Lopez, ahead of ETF Product for Van Eck.

“BUZZ empowers individual investors to potentially benefit from the predictive insights gained by measuring the collective convictions about stocks, ultimately building the benchmark for social sentiment,” Lopez added.

The ETF will have an expense ratio of 0.75% and its underlying index will rebalance monthly.

Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA, said he thinks the new ETF “will allow investors a better more tax efficient way of tapping into what is being talked about,” not create more a frenzy in the market, as happened with GameStop shares via the WallStreetBets platform.

The new ETF’s index will cast a wider net, capturing also company news trending on Twitter, explained Rosenbluth.

VanEck’s Bitcoin ETF

In separate news involving VanEck, the Cboe has filed with the Securities and Exchange Commission to trade VanEck Bitcoin Trust ETF, which is pending before the SEC. The Cboe filing starts the clock on the ETF filing, which requires approval or disapproval within 240 days.

To date, the SEC has not approved any Bitcoin or cryptocurrency ETF. There’s growing sentiment that the incoming SEC Chairman Gary Gensler, who still has to be confirmed, may be more amenable to such a product than his predecessor since he taught a course at MIT on  blockchain and money.

(Photo: Bloomberg)