In a bid to capitalize on the ongoing tech stock surge, Tidal Financial Group and ZEGA Financial have introduced a new ETF, providing investors with a unique opportunity to invest in the mega-cap technology sector.
What Happened: Business Insider reported that the newly launched YieldMax Magnificent 7 Fund of Option Income ETFs will invest in seven established YieldMax single-stock ETFs. Announced on Tuesday, these funds use covered-call options strategies to generate capital gains and income from leading technology giants, including Apple Inc. AAPL, Microsoft Corporation MSFT, Alphabet Inc. GOOGL, Meta Platforms Inc. FB, Tesla Inc. TSLA, Amazon AMZN, and Nvidia Corporation NVDA.
The fund will be reallocated monthly to ensure an equal weighting of each of the seven YieldMax ETFs within the Fund’s holdings. The move would give accessibility and streamline ownership for shareholders, with indirect exposure to the Magnificent Seven through a single ETF.
Despite the potential for high returns, YieldMax has cautioned investors that the fund involves “a high degree of risk.”
Why It Matters: The tech-stock craze has been a significant driver of the stock market, with the Magnificent Seven stocks contributing to about 60% of the S&P 500’s gains in 2023. The group itself achieved an average growth of over 110%, leading to record-breaking gains for the world’s biggest sovereign wealth fund.
The launch of this ETF comes at a time when the tech industry is experiencing a surge in investor interest. This interest has been fueled by various factors, including the anticipation surrounding the approval of spot Bitcoin ETFs and the subsequent price fluctuations in the cryptocurrency market.
Earlier in January, the approval of spot Bitcoin ETFs in the U.S. had led to a surge in Bitcoin’s value. However, the cryptocurrency’s value plummeted below $39,000 later in the month, erasing almost all the gains made following the ETF launch.
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