If you’re chasing quick returns, single-stock exchange-traded funds allow leveraged bets on individual assets. Here’s what to know before buying.
While these products may offer some investors exposure to harder-to-access stocks, without an understanding of the"nuance and complexity," average investors may have a bad experience, Johnson said.Despite approving single-stock ETFs in July, the Securities and Exchange Commission has voiced concerns.
"In my opinion, these are tools that gamify investing, which I think can be very dangerous," Siperstein said."There is no diversification, very high costs and are simply not necessary for the majority of people." While it's possible to"maximize" returns if you bet correctly on the asset's movement that day, there's also greater loss potential on the downside, he said.