ETFis, a turnkey exchange traded fund provider, is working on a so-called short squeeze fund to help investors capitalize on a heavily shorted market that is beginning to turn around.
According to a recent Securities and Exchange Commission filing, the actively managed Short Squeeze Fund (SQZZ) will seek to outperform the Russell 2000 index and earn current income.
The filing does not reveal who will act as the sub-advisor to actively managed the fund’s investments.
The ETF’s managers will select U.S. stocks and American Depository Receipts that they believe may be subject to a “short squeeze” and lend portfolio securities that they believe may be subject to a short squeeze.
Basically, the fund managers will pick out securities that have a higher potential for capital appreciation, which could result in a short squeeze.
A short position is a sale on a borrowed security. The investor needs to eventually return the borrowed stock by purchasing it back from the open market. If the price falls, the investor buys it back for less than he or she sold it for and pockets the profit.