When the VanEck Vectors Social Sentiment ETF (NYSE Arca:BUZZ) launched last year, the fund had a lot of appeal for investors who didn't want to miss out on the next big meme stock. The fund focuses on "positive investor sentiment and bullish perception." It aggregates data from a variety of sources, including social media and news articles. But has that strategy paid off for investors?
On March 4, 2021, the fund began trading at a price of $24.40. If you were to invest $10,000 into the ETF at the time, you would have been able to own roughly 410 units of it. At the end of last week, the fund closed at a price of just $21.36. That investment would now be worth around just $8,758, resulting in a 12% loss. And that's without factoring in its management fee which costs 0.75%.
A big part of the reason for the downfall is that growth stocks, in general, have fared poorly since the fund's launch. For example, Cathie Wood's ARK Innovation ETF (NYSE Arca: ARKK) has performed even worse, crashing by a monstrous 41% over the same time frame. Despite the inherent risk off going on investor sentiment, which can be rapidly changing, the BUZZ ETF has been a much more stable investment than relying on Cathie Wood's picks.
For now, BUZZ has been a decent buy in comparison. It's still risky since both GameStop (NYSE:GME) and AMC Entertainment Holdings (NYSE:AMC) are in the fund. But with a weight of less than 3% apiece, even if those stocks go overboard, that won't necessarily send the fund crashing. For growth investors, BUZZ can be a great alternative to the overhyped ARK Innovation ETF.