Frenzied price action in stocks like GameStop Corp. led many retail brokerages over the past few days to impose a raft of restrictions on trading activity.
But there still are a number of ways investors can get exposure to GameStop
GME,
and other companies like AMC Entertainment Holdings,
AMC,
even through some analysts warn investors to exercise more than a dollop of caution.
“People who own them or are considering buying them should be aware the risk they are taking on,” Todd Rosenbluth, head of ETF and mutual fund research at CFRA Research told MarketWatch via email.
Read: Here are the biggest short squeezes in the stock market, including GameStop and AMC
“If they think GME will go higher, then that’s their call, even though we have a sell recommendation on the stock. People think of index ETFs as static but clearly they are not,” he said.
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Rosenbluth’s comments serve as a call for awareness investors, including around what they own. They come amid a fight between individual investors and Wall Street hedge funds that has raged for days, causing ripple effects through markets.
On Wednesday, GameStop closed at a record high $347.51 following a 135% surge, while AMC shares quadrupled in price. The unusual price action has people inside and outside of Wall Street worried the a band of investors emboldened by conversations on chat forums like Reddit may be wreaking havoc on the market.
“Investors seeking diversification benefits of ETFs need to be
mindful what is inside to avoid taking on undue risk,” Rosenbluth at CFRA wrote.
For example, he noted that the popular fund SPDR S&P Retail Fund
XRT,
which is usually referred to by its ticker symbol XRT, saw a big jump in GameStop as a proportion of its holdings, by way of its stratospheric climb, making up 20% of the fund.
ETF.com
“Equally weighted XRT is now being dominated by GME,” Rosenbluth wrote in a note.
CFRA also says that Wedbush ETFMG Video Games Tech ETF
GAMR,
has a 14% position in GameStop.
Another thing to consider, Rosenbluth said, is that when pursuing ETFs to gain exposure to GameStop, or other popular stocks highlighted by online forums, is that some ETFs now are underexposed to GameStop, and others due, following their sudden growth.
GameStop’s market value was $17 billion, at last check, after hitting a peak market cap at around $24 billion on Wednesday, an eye-watering climb from its $1.3 billion estimate to start 2021.
Other ETFs with GameStop exposure include Direxion Daily Retail Bull 3x Shares
RETL,
Invesco S&P SmallCap Value with Momentum ETF
XSVM,
Invesco S&P SmallCap 600 Revenue ETF
RWJ,
and Invesco S&P SmallCap Consumer Discretionary ETF
PSCD,
ETF.com
For AMC Entertainment Holdings, there are 27 ETFs that hold exposure, with IQ Chaikin U.S. Small Cap ETF
CSML,
Principal U.S. Small-Cap Multi-Factor ETF
PSC,
Schwab Fundamental U.S. Small Company Index
FNDA,
and Invesco RAFI Strategic US ETF
IUSS,
representing the top funds, according to ETF.com.
In Thursday trade, markets were mostly trying to shake off a sizable downturn on Wednesday partly inspired by concerns about the knock-on effects from wild trading AMC, GameStop and others.
The Dow Jones Industrial Average
DJIA,
and the S&P 500 index
SPX,
were bounding higher, and on track to recover much of the losses from their worst one-day slide in three months.
