Leveraged ETF Craze Turns Its Sights to Other Funds

The leveraged ETF craze is extending its reach beyond the original funds. Companies Rex Shares and Tuttle Capital Management are preparing to introduce four ETFs, either 2x long or 2x inverse on Roundhill's Neocloud and Photonics & Optics funds. These moves come shortly after Roundhill's own funds launched. Roundhill has also filed for a 2x long version of LYTE.

Tuttle Capital Management's CEO, Matthew Tuttle, stated that traders often focus on individual stocks when seeking leverage, with few exceptions. DRAM, a DRAM stock, has been an exception to this rule, as it grew rapidly. Tuttle's company is now eyeing LYTE and NCLD in a similar manner. Established players in the ETF world like Vanguard, BlackRock, State Street, Invesco, Schwab, and JPMorgan are not worried about direct competition, but they are aware of the trend.

They prefer to focus on new themes, but the market's limited resources mean that the competition can become intense. Some of the thematic ETFs launched this year may not survive long, as the landscape becomes crowded.