An exchange-traded fund will launch this week seeking to take advantage of tracking mentions of stocks on the internet to beat the overall market. The company behind the ETF's index has partnered with one of the biggest internet personalities to help with the launch.
What Happened: The VanEck Vectors Social Sentiment ETF BUZZ is set to launch on March 4. Barstool Sports Founder Dave Portnoy shared the news Tuesday with a video press conference on Twitter.
The ETF will use artificial intelligence to track social buzz on the top 75 large-cap stocks each month. The fund will hold stocks with market capitalizations of over $5 billion.
Portnoy promoted the new ETF, saying the new fund is something “that I am part of, that I am putting my face behind, my reputation behind.”
The index behind the ETF will use artificial intelligence to monitor over 15 million online posts a month. A basket of 75 stocks will be ranked each month using the algorithm.
Why It’s Important: The algorithm for the ETF was created five years ago, according to Portnoy. He said he was approached by the team behind the fund.
The fund will be “constantly rotating” its positions, suggesting BUZZ will be an active ETF.
The algorithm behind the ETF beat the S&P 500 by 42% in 2020, Portnoy said. The BUZZ index has outperformed the S&P 500 since the index launched in 2015 according to the fund’s Twitter account.
The fund could see strong interest from retail traders looking to invest in the stocks that are favored positively by users on Twitter and Reddit. The rise in stocks like GameStop Corp GME has sent retail traders to search sites for trade ideas based on what the majority of traders are getting into.
“If you don’t adapt, you die,” Portnoy said.
Portnoy is one of the top influencers on the internet with over 2.3 million followers on Twitter and an active following from Barstool Sports fans. Portnoy owns stock in Penn National Gaming PENN, which has a big stake in Barstool Sports.
Top Holdings: The BUZZ Index has a list of holdings on its website. Here is a look at the current top holdings in the index:
- Twitter Inc TWTR: 3.5%
- DraftKings Inc DKNG: 3.4%
- Ford Motor Company F: 3.1%
- Facebook Inc FB: 3.0%
- Amazon.com AMZN: 2.9%
- Apple Inc AAPL: 2.9%
- Advanced Micro Devices AMD: 2.9%
- American Airlines Group AAL: 2.8%
- Netflix Inc NFLX: 2.8%
- Tesla Inc TSLA: 2.8%
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