Since coming to market in March, the VanEck Vectors Social Sentiment ETF (BUZZ ) has generated plenty of, well, buzz.
Recently, some of the hoopla surrounding the exchange traded fund stemmed from its exposure to Virgin Galactic (NYSE: SPCE), the space exploration stock that rallied in advance of billionaire Richard Branson’s space flight earlier this month.
However, Virgin Galactic rapidly came back to earth, tumbling 38.62 percent last week. A one-week decline like that underscores the risks associated with many of the so-called meme stocks. It also highlights the advantages of the BUZZ approach.
While social sentiment is a vital component in the methodology of the BUZZ NextGen AI US Sentiment Leaders Index (BUZZTR) – BUZZ’s underlying index – that doesn’t mean the VanEck ETF is littered with meme stocks or fundamentally flawed companies.
The BUZZ Rebalance
During its June and July Index rebalance (June 10th 2021 – July 8th 2021), BUZZ generated significant upside, as nearly half the index components traded higher over that period. Additionally, BUZZ offers exposure to some crypto-linked equities poised to benefit when Bitcoin bounces back. Those holdings include MicroStrategy (NASDAQ: MSTR) and Square (NYSE:SQ). In fact, MicroStrategy is the first dedicated crypto stock on the BUZZ roster.
“While many traditional market prognosticators regarded crypto currencies as a bubble, over the past year, the narrative has shifted as many publicly traded companies have been actively investing in the cryptocurrency and blockchain space,” according to VanEck research.
BUZZ may be a credible alternative for investors looking to avoid stock-picking. In addition to Virgin Galactic, the ETF holds AMC Entertainment (NYSE: AMC) and GameStop (NYSE: GME), among others.
“AMC rallied from $2.50 to as high as $20 in January, before pulling back for several months along with other highly followed meme stocks. In May, amid a resurgence of interest, AMC took the lead from GME, captivating the attention of social media communities, leading to a surge in its value by over five-fold in just two weeks amidst surging sentiment and record-breaking trading volume,” adds VanEck.
However, BUZZ augments some of the risk associated with wallstreetbets names by holding an assortment of high-quality stocks, including Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Nvidia (NASDAQ: NVDA), and Facebook (NASDAQ: FB).
More than half the fund’s 75 holdings hail from the technology and consumer discretionary sectors.
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