ETF Firms Launch 2x SK Hynix Funds in U.S. as SEC Scrutinizes Novel Strategies
Updated
Updated · CNBC · Jul 10
ETF Firms Launch 2x SK Hynix Funds in U.S. as SEC Scrutinizes Novel Strategies
3 articles · Updated · CNBC · Jul 10
Summary
Next week, GraniteShares, ProShares and others are set to roll out leveraged single-stock ETFs tied to SK Hynix after the South Korean chipmaker began U.S. trading on Friday.
Demand is driving the launches: SK Hynix has been largely inaccessible to many U.S. investors, and similar products are already among the most popular ETF trades in South Korea.
ETF executives say the wrapper gives everyday investors a simpler, potentially safer way to get 2x exposure than margin accounts, futures or options, but they warn losses can compound quickly and NAV can approach zero.
Market veterans say the bigger risk is ecosystem strain as multiple funds crowd into the same leveraged trade, raising liquidity, counterparty and market-maker capacity concerns.
The SEC opened a comment period on ETF innovation on June 30, and industry participants expect more launches even as regulators weigh where leverage in regulated funds should stop.