ETF Market’s Riskiest Corner Keeps Getting Riskier

These funds are single, but should investors mingle?

Single-stock ETFs have surged since their 2022 debut, currently standing at roughly 130 funds with $24 billion in assets, according to CFRA Research. But despite their popularity, these funds are among the riskiest in the ETF market, with prospectuses that really hammer home their “buyer beware” nature. Risk levels are climbing further as newer ETFs track smaller companies in sectors like AI, consumer retail, and quantum computing.

“These ETFs are much more volatile than the ones linked to mega caps, and while they may be attractive to short-term traders, they are likely not appropriate for long-term investors and advisors,” said Aniket Ullal, head of ETF research at CFRA.

Risky Business

Originally, single-stock ETFs focused on larger companies like Tesla and Apple. Now, issuers such as Themes ETFs are expanding into new territory with funds linked to companies like Hims & Hers Health, Costco, and SoundHound AI. “There’s potential for [single-stock ETFs] to lose their complete value in a single day,” Bloomberg Intelligence analyst Athanasios Psarofagis recently said:

• Year-to-date, single-stock ETFs attracted $6.9 billion, and brought in $15.4 billion in all of 2024, according to CFRA data.
• Fund launches have also accelerated in 2025, with more than 60 launched so far. However, many are linked to smaller market cap, highly speculative stocks like IonQ, Lucid, and Rigetti Computing.

Never Tell Me the Odds: Due to their volatility, single-stock ETFs are typically geared toward professional day traders. Still, retail interest is growing, especially on platforms like Twitter and Discord. “There are no doubt morons and charlatans on these platforms, but there are groups of people I would put up against any hedge fund manager,” said Matt Tuttle, CEO of Tuttle Capital Management, which now oversees 17 single-stock ETFs, including one that tracks notorious meme stock GameStop. 

“I’m a big believer that more tools are better, and we hope people are using tools in the right way,” Tuttle told ETF Upside. He cautioned that single-stock ETFs are not for beginners. “If someone is taking their entire net worth and betting that the S&P is going to go up over the next 10 minutes, that’s stupid,” he said.