Crypto News: ETF IQ: Hoarding tickers

Welcome to ETF IQ, a weekly newsletter dedicated to the $12 trillion global ETF industry. I'm Bloomberg News reporter and anchor Katie Greifeld.

Back in May, this newsletter mused that there could be a ticker shortage brewing in the single-stock ETF arena. Fast forward a few months, and it turns out some issuers are taking matters into their own hands.

Enter Matt Tuttle, chief executive officer of Tuttle Capital. He, along with Rex Shares, recently launched the T-REX 2X Long MSTR Daily Target ETF (ticker MSTU). Tuttle estimates that he's sitting on about 20 tickers at the moment.

"There are guys who are going to stockpile symbols — maybe me, for example — and on the good names, you are potentially going to run into an issue," Tuttle said. "You also really want like the 'U' or something like it for the bull, and a way to discern between the bull and the bear if you do both sides."

How could there possibly be a ticker shortage, you might exclaim, with so many potential four-letter combinations? You're not wrong: there's 456,976 amalgams, theoretically. But if you narrow it down to the single-stock ETF universe, possibilities dwindle dramatically.

Take the recent wave of MicroStrategy-inspired ETFs. MicroStrategy carries the ticker MSTR, leaving issuers with one character of real estate if they chop off the letter 'R'. That leaves just 52 or so realistic options, assuming the extra letter is placed either before or after 'MST'.

As such, issuers need to be creative and quick — and in some cases, start hoarding. It's the latter impulse that's making life a little bit harder for the likes of Will Rhind, chief executive officer of GraniteShares. Nowadays, GraniteShares is turned down "more often than not" by the exchanges for single-stock ETF ticker requests. That's either because the combinations they're seeking have already been reserved or belong to funds that have been delisted, Rhind said.

A neat solution would be for US exchanges to follow Europe and Asia in expanding the character limit or allowing the use of numbers. But for their part, the exchanges don't seem too fussed.

"I don't think there are any concerns today around a ticker shortage," Jeff Thomas, Nasdaq chief revenue officer and global head of listings, said in a Bloomberg Television interview. "We do occasionally get questions from companies saying, hey, how can I get more creative on these tickers? Can I include numbers in addition to letters?"

A feature of the ETF wrapper is that even when the underlying market goes offline, the fund keeps trading.

That's been useful this week in keeping tabs on Chinese equities following the nation's sweeping stimulus package. While markets in mainland China have been shut for a holiday, US-listed Chinese stock ETFs have continued their breathless rally. The $8 billion KraneShares CSI China Internet Fund (KWEB), for example, has climbed another 12% this week, following last week's nearly 27% gain.

With bulls on Chinese stocks back in full force, issuers are naturally seizing on the momentum. Roundhill wins this week's unofficial good timing award with the launch of the Roundhill China Dragons ETF. The fund, which trades under the ticker DRAG, tracks an equal-weighted basket of five to 10 of the largest and most innovative Chinese tech companies that the issuer collectively dubs the "China Dragons."

DRAG sets sail against a backdrop of desperate demand for Chinese assets following years of underexposure, with hedge funds piling in at a record clip. But how long will the good vibes last?

KWEB provides a worthwhile cautionary tale. The fund is on track for its biggest week of inflows ever, with investors funneling nearly $1.4 billion through Thursday. But this ETF carries painful memories for many investors: recall that in 2022, more than $7.3 billion was poured into KWEB as traders tried to time the bottom in Chinese equities. Instead of catching the knife, those investors were delivered brutal losses as KWEB's price plunged by more than 52% that year.

Not everyone is convinced that this time is different. In fact, Rajiv Jain sees plenty of parallels between this episode and the Covid "re-opening trade" that went bust in 2022 — a rally that ended up fizzling within a few months as the economy disappointed. As such, the manager of the top-performing $23 billion GQG Partners Emerging Markets Equity Fund has kept his holdings in Chinese stocks at about 12% of the fund — roughly half of the weighting of its benchmark.

"How many times in the last three years have we seen these excitements" only for them to dissipate, Jain told Bloomberg's Ye Xie.

Ex-LTCM founder Victor Haghani has filed for an ETF, joining a string of wealth managers who have put their names behind the investment vehicle.

Bitwise Asset Management Inc. became the first to file for a fund that invests directly in XRP, the world's seventh-largest digital token.

A new ETF is offering investors a novel way to eke out income from the world of stocks by targeting an unlikely index: the Nasdaq 100.

In this week's Drill Down on Bloomberg Television's ETF IQ, Andrea Eisfeldt of the Anderson School of Management at UCLA stopped by to talk about the Simplify NEXT Intangible Value Index ETF (NXTV). Intangible assets, as Eric Balchunas described, are all the things you can't measure on a balance sheet — brand names, ideas, patents, goodwill... you get the idea.

NXTV is a value-oriented tilt on that idea, and as such, is light on tech stocks but heavy on telecom. As Eisfeldt said:

Those companies that are intangible-heavy, they have a lot of knowledge-capital, brand-capital, organization-capital, data-, people-, customer-capital, they can be value companies.

NXTV has gained 9.5% on a total return basis since its mid-April launch and charges 25 basis points.

BlackRock's Kristy Akullian, Dave Mazza of Roundhill, and Cboe's Rob Marrocco join me, Eric Balchunas and Scarlet Fu on Bloomberg Television's ETF IQ. Watch live on Mondays at noon on Bloomberg Television, on the Bloomberg Terminal at TV <GO> and on YouTube.

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