Themes Preps 15 Leveraged Single-Stock ETFs

Pick a stock, any stock. Ramp up the risk, and the potential reward.

The number of leveraged single-stock ETFs on the market has more than doubled in the first four months of the year, going from 42 to 87, data from Morningstar Direct show. And the trend may be accelerating — one of the emerging players in the space, Themes, last week filed initial prospectuses with the Securities and Exchange Commission for 15 such products. Those leveraged single-stock ETFs focus on a range of public companies including Airbnb, Costco, and Hims. The category has moved well beyond names like Tesla and Google.

“We absolutely intend to expand,” Themes Chief Revenue Officer Paul Marino said, adding that the firm wants to be the “full-stop shop for funds that are of interest to institutional and retail traders.” Earlier this year the company added ETFs focused on Adobe, Robinhood, and Palo Alto Networks.

Leveraging the Trend

The SEC first approved single-stock ETFs in 2022. While there were just a dozen leveraged single-stock ETFs in the US market at the beginning of 2023, the category has been growing rapidly. Additional data from Morningstar shed further light on the corner of the market:

• Sales are accelerating. The category brought in $1 billion in 2023 and $10 billion in 2024. Sales this year through April were $7 billion.
• Leveraged single-stock ETFs reached a high of $19 billion in assets last November, but now sit at about $17 billion.

Buyer Beware: Leveraged single-stock ETFs are not for everyone — something the forthcoming Themes funds clearly state in their prospectuses. The products are intended for day traders who know the risks. The key with this category of ETFs is moderation, said Roxanna Islam, head of sector and industry research at TMX VettaFi.

“Retail investors have been using leveraged single-stock ETFs to take advantage of the current market volatility and make bets that a stock will either gain or lose over a single day. Typically these ETFs pick already volatile stocks (many in the disruptive technology space) and magnify returns 2x or 3x,” she said. “These often come with excess risks as many investors hold these longer than a day to potentially juice returns even further. But if these ETFs are used in small allocations, they have the potential to enhance overall portfolio returns without causing significant losses.”