From Yahoo Finance: 2025-06-16 06:05:00

2025 is set to be the year of single-stock ETFs, with leveraged options in the US doubling in the first four months. Dozens of new products are being registered, including Themes’ 10 ETFs, Defiance’s 14, and LevMax’s 12. The surge is driven by retail investors seeking institutional trading options.

Themes ETFs, with over $100 million in US ETF assets, is planning accelerated returns with caps on potential upside for five ETFs. These returns would come from selling call options. The chief revenue officer believes this approach offers accelerated returns without taking on accelerated risk.

The rise in leveraged ETFs is linked to the surge in sports betting, according to Elm Wealth’s founder. While there may be a use case for young investors with low financial capital, leveraged ETFs can lead to rebalancing and drag on net returns due to volatility. Even if a stock maintains its price, the costs of leverage may outweigh the benefits.

There is skepticism about the value of leveraged single-stock ETFs, as any volatility can lead to frequent rebalancing and a drag on net returns. The costs of leverage often outweigh the benefits, making it a risky investment option. It may not provide the expected returns for most investors.

Read more: Single-Stock ETF Market Swells With Firehose of New Products