When you’re ready to buy BUZZ, go over this checklist. Because the BUZZ ETF is traded on the New York Stock Exchange (NYSE), you can acquire shares just like any other stock. There are three main steps to learning how to buy stocks:
- Choose a brokerage: To purchase shares of the BUZZ ETF, you must first open a brokerage account. Before you start looking for the top brokers, figure out what kind of financial methods you want to follow.
- Deposit funds: After you’ve set up your account, you’ll need to fund it. Simply connect your bank account to your brokerage account and deposit funds that you can trade with.
- Search for BUZZ and click Buy: Because the BUZZ ETF is traded on the New York Stock Exchange, you should have no trouble purchasing shares. Simply go to your brokerage’s website and search for the ticker symbol BUZZ, then click “purchase.”
Is the BUZZ ETF considered a stock?
The VanEck NextGen AI US Sentiment Leaders Index is followed by the BUZZ exchange-traded fund (BUZZ ETF), which was established in March 2021. (BUZZTR). The stock selection procedure at BUZZ is broken down into three steps. First, based on the number of posts, it determines which stocks are gaining the most interest online.
Is the Buzz ETF a worthwhile buy?
Of course, that isn’t enough on its own. While the BUZZ ETF appears to be more reasonable than it appears at first appearance, it is still not a smart long-term investment strategy.
The index’s outperformance is relatively concentrated, which is one of the reasons for this. The index effectively tracked the market from late 2015 through the lows in March 2020.
In fact, if the BUZZ ETF had been around during that time, investors would have lost money. Annual expenses amount to 75 basis points (0.75 percent) of assets, which is a significant amount. Plus, in a world when broader index funds have charges as low as 1.5 basis points, that looks unusually excessive.
BUZZ has risen sharply since its lows in March 2020. As the index provider points out, the activities used to choose the stocks changed as well.
But, of course, that isn’t entirely unexpected. You’re likely to outperform if you pick the hottest stocks in a raging bull market fueled in part by retail investors. What happens when the environment shifts, as it always does?
The obvious issue here is the distinction between correlation and causation. Over the last 12 months, the stocks in the index have outperformed the market. Is it because those equities are being discussed on social media by investors? Or are those stocks trending on social media because they’re performing well?
Not Quite Good Enough
My objection is straightforward: I do not believe that investors should pay 75 basis points to have social-media traders pick their equities for them.
Yes, the index that the BUZZ ETF is based on has outperformed. However, as the old adage goes, past success is no guarantee of future results. We don’t know why the index has outperformed given the portfolio construction.
VanEck claims that the outperformance is due to investor sentiment correctly forecasting pricing. There are also other rational explanations.
Riskier equities may appeal to social media traders. The riskier stocks are the ones that do well when the market is raging. With the S&P 500 up a whopping 63 percent in the last year, this is unquestionably a booming market.
The BUZZ ETF, in general, appears to be stuck in the center. There’s nothing wrong with capturing the market’s long-term upside with low-cost index funds. There’s also value in putting in the time and effort to uncover undervalued companies with significant growth potential.
However, spending 75 basis points a year to have social-media traders choose your investments? That isn’t a viable plan.
Is Van Eck a public place?
VanEck has a long history of providing substantial portfolio options to investors. We believe in putting our clients’ interests first in all market circumstances, which is a basic tenant of the VanEck brand.
VanEck has been privately owned and operated by the van Eck family since its inception. The firm was founded in 1955 by John van Eck with the goal of bringing post-World War II investment opportunities to American investors. When his sons, Derek and Jan, joined the firm in the early 1990s, VanEck embarked on a series of business ventures that have resulted in significant development. Jan has overseen the firm’s expanding global activities since his brother Derek’s death in 2010, and he continues to do so today.
What exactly is the ARKK ETF?
The investment aims for long-term capital growth. The fund is an actively managed exchange-traded fund (“ETF”) that will invest primarily (at least 65 percent of its assets) in domestic and overseas equity securities of companies related to the fund’s investment theme of disruptive innovation under normal conditions. It will invest in both developed and emerging markets when it comes to overseas equities securities. It has the ability to invest in international securities (including American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”)) as well as securities listed on local foreign markets. The fund has no diversification.
How does the buzz ETF function?
The Buzz NextGen AI U.S. Sentiment Leaders Index, which finds companies receiving “bullish social media sentiment,” is used to select the 75 stocks that make up the Van Eck Vectors Social Sentiment ETF (BUZZ). In other words, it chooses companies based on rising popularity rather than price.
Is Buzz ETF managed actively?
This isn’t your standard exchange-traded fund (ETF). There are actively managed funds, but to reflect the trending behaviors of online investment discussion, this ETF will need to be continuously changing positions. Given the growing popularity of social media companies among retail traders, this new ETF is likely to draw investors once it begins trading. DraftKings is one of the firms featured on the Buzz index.
When did the buzz ETF begin?
The BUZZ ETF, which will begin trading on March 4, will follow an index of stocks that benefit from positive sentiment conveyed via social media, news, blogs, and other “alternative datasets.”
It’s a timely start, given that daytrading has grown in popularity in recent months, particularly among young people who get their stock picks from Reddit groups like r/WallStreetBets and other social media platforms.
And, as if to emphasize the point, Dave Portnoy announced the BUZZ ETF’s launch on Twitter. During the COVID lockdowns of 2020, the, ahem, outspoken CEO of Penn National’s (PENN) Barstool Sports began day trading excessively, motivating many of his fans to do the same. (Portnoy is also a partner and part-owner of Buzz Holdings, the company that created the underlying index for BUZZ.)
However, the early euphoria – and early skepticism – about what this fund could be misses the target. Continue reading to learn more about the BUZZ ETF and what it isn’t.