Single-stock exchange-traded funds (ETFs) have been labeled as extremely risky by regulators and market commentators. Nonetheless, in 2022, the United States listed them for the first time. However, single-stock ETFs appear to fall under Rule 6c-11 under the Investment Company Act of 1940<\/a>. In combination with recent changes to the listing standards at stock exchanges, that rule created a framework that allows ETFs meeting certain criteria to come directly to market without first obtaining explicit permission, through what is called an exemptive order from the U.S. Securities and Exchange Commission (SEC).<\/span><\/p>"
}
}
,
{
"@type": "Question",
"name": "Are Single-Stock ETFs and Single-Stock Futures the Same Thing?",
"acceptedAnswer": {
"@type": "Answer",
"text": " No. Single-stock ETFs are exchange-traded securities that use derivatives contracts (options) on individual stocks to provide leveraged returns. The ETF itself is a security. Single-stock futures (SSFs)<\/a> are not securities but instead are futures contracts<\/a>, with an individual stock as the underlying security<\/a>. Each contract typically controls 100 shares of stock. While the reception for single-stock futures was positive when they launched in the U.S., activity has faded<\/a> over time.<\/p>"
}
}
,
{
"@type": "Question",
"name": "Are Single-Stock ETFs Good Investments?",
"acceptedAnswer": {
"@type": "Answer",
"text": " Single-stock ETFs are intended for very short holding periods, such as intraday, and are not meant to be held as longer-term investments. The SEC states that, “[b]ecause of the features of these products and their associated risks, it would likely be challenging for an investment professional to recommend such a product to a retail investor while also honoring his or her fiduciary obligations<\/a> or obligations under Regulation Best Interest<\/a>. However, retail investors can and do access leveraged and inverse exchange-traded products<\/a> through self-directed trading.”<\/span><\/p>"
}
}
]
} ] }
]