Who doesn’t love a mango? They’re sweet, tangy and now chock full of artificial intelligence goodness.

Asset managers Yorkville America and Corgi Securities both filed for ETFs last week targeting MANGOS. Not the juicy fruit native to northern India, but rather the acronym representing the big tech and AI space, standing for Meta, Anthropic, Nvidia, Google (Alphabet), OpenAI and SpaceX. It’s not only the latest of Wall Street’s alphabet-soup colloquialisms, but it could also be the next big investing strategy, with Yorkville and Corgi aiming to be pioneers. It’s just like the doctor says: a MANGO fund a day keeps the FOMO away.

Nature’s Candy

Corgi has quickly made a name for itself this summer, bursting on to the scene with roughly 70 funds, mostly thematic and leveraged plays, in a matter of just two months. Meanwhile, Yorkville is the manager behind the Trump family’s suite of Truth Social ETFs and its “America First” investing philosophies. Now, both are looking to package the AI ecosystem into a single tradeable basket:

• The Corgi product will allocate 80% of its assets toward the six MANGOS companies, according to a filing.
• The Yorkville ETF may provide exposure to seven other companies in the AI space, including, SanDisk, Micron, Dell and others, per its filing. The firm also filed for another version of the fund that seeks to generate income through an actively managed option-writing strategy.

MANGOS Mania: Though Anthropic and OpenAI are private (for now), the funds may invest in them directly as an ETF can hold up to 15% of its portfolio in illiquid securities. But mostly they’ll be capturing them by proxy, buying shares of public companies tied to their growth, as well as using a series of derivatives to mimic their price movements.

Now, excuse us while we go grab a mango smoothie.

Soon, they might be calling it Space2X.

SpaceX’s initial public offering, the largest in history, has sent the ETF industry into a frenzy with leveraged funds investing in the company trading over $1 billion in volume on opening day, according to a Bloomberg report. About a dozen leveraged funds hit exchanges last Monday, which could be one of the most active days for the category on record. Nearly all surpassed $100 million in AUM in their debut trading session. But are investors getting ahead of their skis? Some experts argue it’s better to wait until the stock is trading at “fair value,” while others say the short-term trading tools are worthwhile, but only for active investors who are aware of the risk. Still, most investors are acting cautiously, said Will Rhind, founder and CEO of GraniteShares.

“Since the beginning of [last] week, we’ve seen more interest in the short than the long from investors by a decent margin,” Rhind said. “What’s unique about SpaceX is the fact that it’s an IPO, it’s not a stock that’s been trading in the market for many years. The bulk of the demand that we’re seeing is most likely from people who are looking to hedge a position and can’t sell in the open market yet.”

Space or SpaceX?

There has been a difference in the performance and inflows between single-stock SpaceX funds, leveraged products from the likes of Direxion, Themes ETFs and others; and thematic funds that include SpaceX. The most that traders of Leverage Shares’ 2x Long SpaceX Daily ETF can lose is what they put in, said Paul Marino, the firm’s chief revenue officer. For most investors, “there’s no convenient way to bet against this stock or hedge it, and plenty of people will want to, whether they think the valuation is stretched or they’re just about to have SpaceX pushed into their index funds, whether they like it or not,” he said.

Other thematics that hold SpaceX have had similarly mixed results:

• The KraneShares Artificial Intelligence and Technology Public and Private ETF (AGIX) is up 28% so far this year but only invests around 3% in SpaceX.
• The Tema Space Innovators ETF (NASA) dropped over 9% on SpaceX’s first day of trading but is up 26% this year.

Space Fever: What’s important to remember is that the space industry, and companies linked to space, are highly speculative. Many space ETFs that have been around for years haven’t seen much success, according to Rhind.

“[Space] companies, for the most part, weren’t that much of an exciting story, and SpaceX was really the company that ignited interest in space,” Rhind said. “Some of the [space] ETFs have had a huge amount of inflows, not because the fundamentals have changed for any of the companies, but because SpaceX was coming to market, and there was hype around SpaceX being the catalyst for renewed interest in the space sector.”

Predicting industry trends is like reading tea leaves, and experts at State Street just put on a new pot.

Assets moving into exchange-traded funds are outpacing predictions by double-digit percentages, with total flows expected to surge past $30 trillion by the end of the decade, according to a recent report from the asset manager. But the firm also made industry predictions about everything from the skyrocketing use of derivatives to which part of the world will have the fastest growth. (Spoiler: It’s the Asia-Pacific, specifically Japan.)

“Many people who follow the ETF industry believe that the next leg of growth is in geographies,” said Michael Arone, chief investment strategist at State Street Investment Management. “As more platforms are available to more investors, do-it-yourself investors … have access to more information, more accounts. This is an overlooked growth area of the ETF market.”

Crystal Ball’in It

Another overlooked aspect of the industry is the massive breadth of challenges that new products address, Arone said. “When ETFs started, the question was: ‘What index do I want to own? What market do I want to be [in]?’ Those types of things,’” he told ETF Upside. “Now, it’s a conversation about: ‘What outcome am I trying to achieve?’ and the sheer number of use cases across ETFs, whether it’s options strategies, buffer strategies or income-oriented.”

Bartolini and Arone made several long-term bets on how the industry will evolve:

• Over the next five years, a majority of ETFs will use derivatives. (Over the past five, low-volatility funds had cumulative outflows of $37 billion, while defined-outcome products had inflows of $5 billion.)
• In the next three decades, funds will morph into tokenized investment platforms trading all day, every day, globally.
• Although ETFs currently account for 14% of global investable assets, that figure could rise to 50% within the next decade.

Instantaneous Rate of Change: When it comes to derivatives, Arone said, part of their outsized growth is actually due to the appeal of income-generating products. Even though bond yields are high, a diversified portfolio of stocks and bonds might yield just a couple percentage points, which would be below the rate of inflation. As a result, many investors (particularly retirees who rely on stable finances) are turning toward derivative-oriented ETFs to generate income.

“We’re seeing real appetite from investors [for derivatives],” Arone said. “Despite the fact that bond yields are higher, in globally diversified portfolios, incomes continue to be a challenge, particularly given where inflation is.”